The fund will be managed by a new venture firm headed by Bertelsmann corporate venturing veterans.
Bertelsmann Investments, the corporate venturing arm of the German publishing conglomerate, is selling 50% of its ownership in its New York-based digital media investments fund to external investors.
The $450m fund, Bertelsmann Digital Media Investments (BDMI), invests in seed and early-stage startups in next-gen media, web3, enterprise software and fintech. The portfolio includes media startups such as Lemonada, a podcast network, and Flip, a beauty shopping app.
Management of the fund will be transferred to a newly formed firm, 1745 Ventures, which be managed by Urs Cete, who spent almost 19 years as managing partner of BDMI, and Sim Blaustein, a BDMI partner of 13 years.
The partial sale and transfer of the fund to an external venture firm follows a trend that several corporations have taken recently to spin off their corporate venture capital units. Intel recently announced and then decided against spinning off its CVC arm, Intel Capital. Insurers Axa and Uniqua have both spun out and rebranded their CVCs. While Bertelsmann is not spinning off its CVC unit, the semi sale of one of its funds constitutes a partial offloading of its investments.
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Bertelsmann owns an array of media businesses including book publisher Penguin Random House and German broadcaster and entertainment group RTL. Its corporate venturing arm, Bertelsmann Investments, which was founded in 2006, comprises several funds including Bertelsmann Asia Investments and Bertelsmann India Investments. It also has an investment unit, Bertelsmann Next, which targets growth stage companies.
The reasons for selling investments or spinning off CVCs are varied but, with a dearth of exits in the IPO market, many corporates may be seeking external investors to either conserve or reallocate cash.
“BDMI has fulfilled all strategic goals we set at inception in 2006, especially with regards to supporting the digital transformation of our media businesses,” says Jan Hὃlkemann, spokesperson for Bertelsmann Investments.
“Now is the right time to open the fund to external investors. We are now aiming to further develop the fund by also leveraging external expertise. While cash proceeds are a natural part of any secondary transaction, we do not comment on the magnitude of the purchase price that was paid.”
Cete said in a release that the 1745 Ventures team “look forward to continuing our close relationship with Bertelsmann Investments and are very happy to welcome new investors to our platform.”
