GCV Powerlist 2018: Grant Allen

Grant Allen became head of ventures at Switzerland-based industrial giant ABB at the beginning of 2017. The passing of the baton from outgoing ABB Technology Ventures (ATV) president Girish Nadkarni (who is on the Powerlist for his new unit at France-based oil major Total) comes after Allen had been with ABB for more than seven years, and over a decade as a venture investor. At ABB, he has led more than a dozen investments, including the exits of Industrial Defender, Validus DC and Persimmon Technologies, all positive returns for ATV.

Before ABB, Allen was a vice-president with Core Capital Partners, a $400m enterprise software-focused venture firm in Washington DC, capital of the US. Among other roles, he had stints at Microsoft in its mobile and embedded devices division, working for the CEO of Jingle Networks – later sold for $63m – and at several startups, including a web services company focused on the mortgage industry he founded when was 19 years old.

Allen has an MBA from Wharton School at University of Pennsylvania and a BSE from Pratt School of Engineering at Duke University. He was recently appointed to US trade body the National Venture Capital Association’s corporate venturing advisory group. Outside ABB, he is an angel investor, with positions in more than two dozen companies, including Uber, Avizia, Catawiki, EquityZen, Munchery, AltspaceVR, Earnest and Kanler. Previous investments include LivingSocial, Alibaba and Visually. Allen is on the boards of Soft Robotics, which this month closed a $20m round, Trilliant, Grabit and Atom Power.

Bazmi Husain, chief technology officer of ABB, for last year’s Powerlist said: “Grant has the rare mix of deep understanding of the startup ecosystem and the needs of an industry technology pioneer. Participating in and leveraging the startup ecosystem is now an integral part of ABB’s technology strategy and we are firmly committed to corporate venturing as a key lever to advance ABB’s innovation envelope.”

In a GCV interview this year, Allen said: “With the team, we are in growth mode and that is an exciting time. We have been a very lean team for five years and really stuck to our knitting. We have been given the charter to invest $50m a year. Part of that will go into serving the existing portfolio, but we have a fair amount of cash to put into new investments and we aim do eight investments a year. Because of the size of our team, we are very bandwidth constrained.

“The biggest thing to note is that we had a CEO change [to Ulrich Spiesshofer in 2013]. We did drive a lot of value for the company, but after the failure of ATV investment GreenVolts [at the end of 2012], we went into retrenchment mode. We were only investing where it was truly critical. We were working on the existing portfolio and making sure that these companies stayed afloat. Companies like Scotrenewables [Tidal Power], which is in a very tough space – offshore marine power – are doing quite well. We are raising £20m ($25m) right now and it is one of the world leaders in offshore energy generation.

“If I were to look at the output, we are probably in the top decile among the kind of deal-dollars per investment professional. We are viewed as a Swat team of sorts, to go quickly in to deploy capital and drive value for the company. We look at value extraction very much as a two-way street. So that is why we have hired a vice-president of engagement because the startups going to us want to tap into ABB, whether it is our brand or our technical bench. We need to make sure that they get what they came for.

“I would not be so bold as to say that we provide more strategic value than any competitor. We have become very good at it, because we have been out there for eight years, exposing the startup to our technical bench very early. For companies that we invest in, I think they would say they have more ready access to the technical experts inside ABB. Some other corporates, they are either working with the labs or the technology transfer group.

“We are a bit more bespoke, partially because it is all coming through one house – the group I run. Depending on the situation, we might deploy one of our research managers at the very first meeting. If it is a sensor company, it will have direct access to Barbara Panella, our global research manager for sensors, and that, for a company like Kespry, which is looking to put additional telemetry on drones, was of huge value. I don’t want to be a gatekeeper, I want to be a connector.

“I generally think of myself as a bit of a contrarian investor. I like to invest where things are not popular at all – so completely countercyclical. With robotics, I think ABB did a good job of investing in companies like Vicarious [in 2014] and Soft Robotics when they were a bit more out of favour. Just recently I was on a call with a VC who said he really wished he had seen the company two years ago, and I said: “I think you guys are late to the party [Soft Robotics raised $20m at the start of May].” Valuations are out of whack. There are too many firms chasing too few deals.

“That is one of the big reasons that even though we have done seven deals in the robotics and artificial intelligence space, I see us pulling back a little bit, because we are going to look at the next out-of-favour space. It is a great time to hit these emergent areas maybe three years in advance of when they are really going to go primetime. Distributed energy resource management systems is another example, where we are engaged with Enbala. They are just starting to ramp revenues in a serious way and it really helps to have ABB there as a partner, because in some cases we are actually selling alongside them. That is a pretty valuable proposition.

“For 2018, we are likely to be on pace, if not up 10% from last year, which is going to put us on track to do eight or nine investments for the year. If you look at the capital we are being asked to deploy, the cheque size will go up. I think you will see our average cheque, which today is around $3m, increase to $5m.

“You will see us break away from what we have been doing in the past two years, which is a lot of factory intelligence. We are considering two thematic camps. One is later-stage strategic deals that map to what our power grids and electrification product businesses are doing, so two of our four divisions.

“On the other end of the spectrum, we are looking at breakthrough technology for our robotics and motion, and industrial automation businesses. We have been talking about the internet of things as a buzz-word for probably three or four years now. I think the technology is at a point where we are starting to look at it more seriously even though the market traction has not been very impressive.

“The area I am very excited about is what we call automation of automation. This is the ability to deploy robotics – increasingly mobilised robotics – where you put one of our arms on top of automated guided vehicles. Deployable, trainable and testable in a very quick fashion, so that we can do machine tending, flexible manufacturing, short run cycles, and have them be truly adaptive. This has been talked about for a while but I have yet to see any robust solutions that you can drop in and have a three to eight-week testing cycle and automation deployment cycle become a one-week, if not one-day, deployment cycle.

“As we are talking about themes, it is important to go through what are still our four thematic buckets because those generally do not change. We serve three types of customers – factories, utilities and the built environment – which can include a lot of different types of customer. We are looking at technologies that map to the theme of future factory, which is really what you are looking at as industry 4.0. That is robots, other manipulation, training control software, advanced human machine interface, safety systems.

“Other than utilities and the built environment, the fourth bucket is the horizontal layer which sits on top of all of that – the digitisation layer. Just like GE and Siemens are looking at Predix and MindSphere respectively, we are looking at our ABB Ability digital platform, which is really a connective tissue layer, a set of common components that our businesses can point to build value-added solutions for our customers.

“I also have fears as well, that we are not moving fast enough. Our team could easily be three or four times the size it is today. For a company that has a $40bn top line and a $1.5bn R&D budget, I think we should be even more aggressive in investing in breakthrough technologies. That is probably the biggest thing that keeps me up at night, that we are seeing some great things, but every day I am passing on amazing technologies.

“As an example, we are a leader in robust power gear and we have built high-voltage transformation systems that will be sitting at the bottom of the ocean a thousand feet down. In my mind, that sort of expertise is relatively fungible, and you could translate it to doing power transformation equipment and energy storage that would exist in the outer reaches of space. That may sound like a bold statement but I think there is no reason ABB should not be planting seeds today to be a leader in powering next-generation built environments that exist on Mars and other places in space.

“We did end 2017 pretty strong. We invested in a fund called G2VP, which is a spinoff from Kleiner Perkins Caufield & Byers [founded by its green growth fund senior partners Ben Kortlang, Brook Porter, David Mount and Daniel Oros].

“We also invested in Kespry, which is a drone company working in industrial field services [that raised $33m in December’s series C round]. We will be helping Kespry expand from insurance applications and mining automation to other areas that are germane for ABB. If you look to 2018, we are taking that mining automation thread and extending it. We are looking at additional sensing and automation technologies which will push mine intelligence to the very edge, to the point that we are collecting ore and understanding what is in that ore with high accuracy, which is really the holy grail to drive efficiency and increase profitability for mines. On that investment, stay tuned.

“As we show that we can provide strategic value and I gain the confidence of the groups I am working with inside ABB, two things will probably happen. For strategic deals, we will see the cheque size go up. You will see us driving much more progressive big bets for the businesses which I think will really break through. With some of those categories I mentioned, such as space tech or advanced transportation, they are going to say: “Yes, you know this is important to ABB even though it is not in our current roadmap. Grant, we trust you, we trust your team.”

“They are still high-risk, but they help ABB by getting early insight into some of these emergent areas. Autonomous transportation is clearly one of those, as we are seeing a lot of that sensor tech trickle over into the factory, into drones. There are a lot of progressive bets we can be making and hopefully in the back half of 2018, into 2019, we will be making a lot more of those.”