TDK podcast analysis

Global Corporate Venturing teamed up with 500 Startups’ CVC Insider Series, where top CVC practitioners offer advice and best practices regarding common challenges encountered within corporate venturing.

Featured so far to end-March in this Global Venturing Review podcast series of interviews mainly by Nicolas Sauvage, head of TDK Ventures, were:

Leadership Series: David Hayes (BP Ventures)

Leadership Series: Yvonne Lutsch (Bosch Venture Capital)

Leadership Series: Francis Ho (Samsung Catalyst Fund)

Leadership Series: Jaclyn Kossmann (Applied Ventures)

Leadership Series: Jason Miles (Volvo VFS)

Leadership Series: Jennifer Ard (Intel Capital)

Leadership Series: Aaron Brandt (Hypertherm Ventures)

Leadership Series: Jacqueline LeSage-Krause (Munich Re Ventures)

Leadership Series: Gen Tsuchikawa (Sony)

Leadership Series: Heriberto Diarte (Schneider Electric Ventures)

Leadership Series: Oliver Keown (Intuitive Ventures)

Leadership Series: Jeffrey Li (Tencent Investment)

Leadership Series: Mark Sherman (Telstra Ventures)

What makes a good leader? It is the sort of question Nicolas Sauvage, head of TDK Ventures, could answer.

But in Sauvage’s unique series of interviews with his peers it comes out that one sign of a good leader is the ability to ask the right sort of questions, at the right time, to the right person.

An analysis of the transcripts in these interviews shows Sauvage is adept at asking people and then applying the “golden nuggets” and insights he elicits back to the operation of his own, highly-successful corporate venturing unit. Building a successful team able to deliver on the entrepreneurs and parent company’s often-changing goals and priorities is difficult.

The founding question is how people end up in the profession in the first place given until the launch of the GCV Academy and now Institute there was no professional development specifically for unit leaders and teams as well as the executives in the main business units and C-suite who need to know how to land the value created back inside the corporation.

By CVCs, for CVCs enables the insights to be shared. Or as Jacqueline Lesage Krause put it in her discussion: “I so wish that when I had gotten going doing CVC that something like this had existed because the learnings are huge.”

It also enables the top 20% of CVCs – effectively the GCV Leadership Society of corporate venturers – to be more clearly identified as well as the GCV Rising Stars and Emerging Leaders with the deals and ideas to take the industry on to great heights – as Francis Ho, head of Samsung Catalyst Fund, put it in his opening remarks: “I am very excited about a couple of our team members, Nicolas Autret and Radhika Malik, receiving the Emerging Leaders and Rising Stars awards from Global Corporate Venturing.”

With attention and prestige for the industry comes greater competition for places. Yvonne Lutsche from Robert Bosch Venture Capital eloquently described the fight she had to be hired and how hard she worked to understand and prepare for the lengthy job interviews.

There are differing approaches from almost all the interviewees about specific mechanics to running an investment committee or size of team and amount to manage. As David Hayes from BP Ventures noted, these committees and teams can change as senior management change.

This requires, as Jennifer Ard from Intel Capital put it: “Agility”. Sauvage noted that often small CVCs tend to want to follow a very rigid process because it is saying this is the way to do it but with experience comes wisdom to treat each potential investment differently.

At the strategic level, however, there is often agreement that investing in successful startups and scale-ups can lead to strategic value. Strategic value can sometimes fail to translate into financial success for the startup but there can be causation as well as correlation, which is where the power of corporate venturing lies.

An entrepreneur is looking for capital, customers, product development, hiring and an exit. Bringing these proof points together over years and decades in a consistent way drives a corporation’s innovation value up, which impacts long-term total shareholder returns. But to get the returns requires putting the startups rather than corporate parent first – a hard task for the political executive. As Hayes said, even strategic-first CVCs have to have a “founders first mentality”.

Then it is about the CVC “being part of the mothership success” story, as Lesage Krause put it, with clear strategic value and liaison between the startups and the mothership in a proactive way.

And that comes back to the art and science of dealmaking and working with entrepreneurs. Heriberto Diarte, head of SE Ventures, Schneider Electric’s CVC unit, described one way of finding the stars. “The best investments are going to be very controversial. We know that. We let people have their golden ticket and say, we are going to do this even if all the rest of you are against it.”

And if it goes well or badly, the one team ethos can kick in. As Samsung’s Ho put it: “We were very aware of how things are traditionally done in different VCs.

“We saw the good parts and the bad parts. One part we really wanted them to focus on was to make it a one team together kind of concept. We all talk about that, but I believe we actually have it in practice. What it means for us is that we are not hung up on, it is my deal, it is your deal. It is us working together.

“We literally try to find ways to complement each other because we are very different across the set of team members.”

And even if a deal falls apart, there are insights to be gleaned. As Sauvage said reflecting on Ho’s comments: “Due diligence is where the learnings come from or actually start from. You may actually learn a lot but not invest, and still learn that it is actually a good place for an acquisition, or it is actually a very bad place for an acquisition.”

Ultimately, the success or otherwise of a CVC for its portfolio and parent comes down to team building, skills and communication. The glory might come from winning a trophy deal or a large financial return but these opportunities are more likely the more a unit prepares for them by putting in place the right environment.

As Gen Tsuchikawa, CEO of Sony Innovation Fund, put it: “When I started the CVC team, we pulled together many internal people, mostly internal people.

“What I found was that some people had M&A backgrounds and were great at execution, but were not used to going out to conferences and meeting startups and getting to know startups.

“Some people are really good at tech scouting and going to conferences and finding new opportunities and introducing them to Sony.

“Some people were really good at pulling out Sony resources and pulling together a business development discussion.

“So, in the first one to two years, we went through a pretty massive cross-training exercise of internal people. Now that has really paid off.”