I moderated two sessions at the annual symposium of Global Corporate Venturing; one on ‘collaboration within the corporation’ with David Eyton, Head of Technology at BP, and Issam Dairanieh, head of BP Ventures (that’s us in the photo); the second on advanced materials with Andrew Haughian of Pangaea Ventures, Nuno Carvalho of Bekaert Venturing, Richard Riggs of Saudi Aramco Energy Ventures and Graham Howes of BP Ventures. As usual, the symposium convened a very diverse group of venturers from all sectors. It’s a great chance for me to press refresh on my view of clean venturing. Here are seven things I learned:
- “Call it uncertainty. Don’t call it risk.”
Former 3M CEO Sir George’s Buckley’s advice to delegates is a great mantra for the venturing industry, particularly for those in struggling markets such as oil and gas. One oil and gas corporate VC told me: “I’ve spent more time on internal communications in the last three months than in the last three years”. He has to explain to his board that the uncertainties of the technologies he’s investing in are worth managing, given the potential cost savings they bring in an era of cheaper oil. Lucky for him, he’s also had one recent sale of a portfolio business (at a decent price). Profitable exits are good for internal communications.
- “A San Francisco start-up gets press coverage in Europe for opening a packet of crisps”
Michael Rolph, CEO of UK fin-tech start-up JustYoyo, expressed frustration at the difficulty of getting coverage in British and European media relative to US counterparts. The broader point is that the British venturing culture is inferior to its European counterpart, which is inferior to the US. In my opinion, we Brits are still stuck in silos with universities not often communicating with their corporates at home, in Europe and elsewhere. The symposium did its bit to remedy this by mixing university venturing sessions with corporate sessions. But there’s more work to be done. The British university venturers I spoke to are still reluctant to see corporates as anything else but potential buyers. This is a lost opportunity.
- Goldilocks and the new university venturing ‘asset class’ – too little money, too much, when will it be ‘just right’?
In previous years the complaint has been that there was too little money investing in British and European university spin-outs. This year, for the first time, I heard more worries about too much money. This comes on the back of the announcement of a £300m fund being launched Oxford Sciences Innovation plc, to provide capital to businesses developed primarily in the Oxford University ecosystem.
The truth is that venture investors in whatever asset class don’t want new entrants because valuations go up. Right now, one of the best and potentially most profitable uses for new money in the advanced materials and clean-tech sector is in bridging the gap between early stage venturing and corporate venturing. Early stage businesses need to be readied for the acceleration and validation that corporate VCs can provide. In the materials space, this is the strategy of the new(ish) venture investor Enso Ventures, which is based in London and New York. More should follow its lead.
- 3D printing and ‘hardware’ gets hot
Venturers from aviation, steel and chemicals all told me they were actively looking for opportunities to invest in 3D printing technology business. It’s a sector that is coming of age. US Venture Formation8 is launching a $100 million ‘Partners Hardware Fund’ led by Lior Susan, formerly of the Flextronics Lab IX. It is targeting investments in 3D printing along with automobiles and robotics.
- What should a corporate VC do when its parent changes strategy and some of its portfolio businesses become ‘unstrategic’?
It should act like a financial VC and if necessary support its investment with follow on rounds. This is what BP Ventures has done with Bright Source, a solar thermal business, despite BP no longer having a strategic interest in solar.
- Oil and gas may be cool on renewables, but are hot for carbon capture
ConocoPhillips and BP Ventures both championed the success of Skyonic, a carbon capture and usage company, in which they are co-investors. Skyonic has recently opened its first commercial scale facility.
- “We can’t spend our way to prosperity or save our way to prosperity. But we can invest our way.”
More words of wisdom from Sir George’s Buckley.