GCV Powerlist 2018: Michael Redding

Relationships are everything in business. With more than 25 years at consulting firm Accenture working directly with global 2000 C-suite executives, Michael Redding, managing director at Accenture Ventures, is well positioned to bring enterprise-relevant startups directly into the boardrooms of the world’s biggest companies.

Paul Daugherty, chief technology and innovation officer at Accenture, for last year’s Powerlist award said: “Mike Redding is a driving force in Accenture’s ventures strategy, leading our strategic minority investments in disruptive new companies that we believe will shape the future of key areas including blockchain and artificial intelligence.”

Redding, who this year has been adding to his responsibilities, for 2017’s award added: “Accenture’s clients are forging ahead with digital transformation and that means embracing new technologies like artificial intelligence (AI) or operating models like crowdsourcing – and applying them now.”

In an interview with GCV published in February, Redding said: “I joined at the tail of the mainframe era, and now we are dead in the middle of the digital era. The evolution of Accenture has really been from a classic consultancy into a services partner for our enterprise clients. We have gone from these point technologies to the digital ecosystems which are the storylines of today, so we have had to reimagine ourselves.

“The role we have at Accenture Ventures is to make sure that Accenture has a systematic approach to emerging and disruptive technologies. We announced our first blockchain investment two years ago, and now those first investments are starting to be deployed at scale. Everyone said: ‘Oh, blockchain is going to be important.’ Accenture invested in Digital Asset Holdings’ blockchain platform, and the Australian Stock Exchange announced in December 2017 that they are going to replatform their exchange on to a digital asset-based architecture. Accenture is in the story because of Accenture Ventures working with our business to say: ‘We believe blockchain is the future. Where can we put a stake in the ground?’

“As you look at the spectrum of corporate venture plays, we wholeheartedly embrace the end of the spectrum that is corporate strategic. I do not do a deal unless I have a sponsor, who has a Accenture services business case that rationalises why we should invest in an individual company. Of course, we want to do well on the capital return, but we do not even estimate a potential return on equity when we consider the investment. We entirely base it on: ‘How does this drive the organic growth of our business?’ If it is sufficient strategic growth, then we would consider the investment.

“I always like to say that we should be nervous about any startup that needs Accenture’s money, as we are quite frankly nothing compared with the world-class VCs and corporate VCs that are out there. It is not about the cash, it is about the go-to-market. If you are a startup and your target customer base is the world’s biggest companies, would you not want to partner the number-one services firm that serves those companies?

“Generally, we are going to invest in a B or C round company, so they have got product and early market traction, and they are ready to scale. They are in this conundrum – they have got engineering talent, and they have probably have a small client success or services arm. We come in and say: ‘You still do what you do best, which is to engineer the heck out of your technology; and we will wrap the services, the delivery side, and the industry verticalisation around you, so that you do not have to.’

“One of our plays is with a vertical software-as-a-service play called NCino. They do commercial lending on top of Salesforce. NCino started in North America and cut their teeth on small and medium financial institutions like credit unions. We partnered them to break into their first tier-one bank. After that, we said: ‘Wow, this is going to sweep the industry.’ We invested. We have swept through quite a few of the North American tier-one banks, and now we are working with them on sweeping European banks. They had their regulatory frameworks down, they already had live customers, and they were ready to break into the big leagues. That is an example of meeting at the right time, making the right deal, and away we go.

“Whereas NCino is an industry application, when you go into a new technology sector – like quantum or blockchain – you are going to have to take on more risk. You have to go upstream a little bit, and go to an earlier stage, knowing that there is a higher probability that you may not partner with the right one, because the market has not spoken yet.

“We believe quantum is the future – the question is when. If I had a crystal ball and could tell you that August 2019 was the date that quantum goes big, I would bet everything I have, retire and go live in Monte Carlo and watch my cash roll in. Like with blockchain, we need to put a stake in the ground. By investing, we have skin in the game, and therefore we have an institutional commitment to the domain, and in particular to 1QBit in this case, such that, if they can be successful with us, we can be successful together. The market will tell us who the winners and losers are, but we believe these guys have the potential.”

Redding’s team, which includes GCV 2018 Rising Star Pramila Mullan, invests in about eight to 10 deals a year, with those this year including US-based augmented reality (AR) software developer Upskill’s $17.2m round.

Its exits include Aptelligent to VMWare, Apigee to Google for $625m, Soasta by Akamai and Predixion Software by Greenwave Systems. The purchase of Applause by Vista Equity Partners saw Accenture Ventures roll over its stake to retain a minority investment.

As Redding said: “We are not a fund, so I do not need to exit. I would like my money back, and I would like it to have appreciated, but I am not like: ‘Oh it is eight years in, I have got to get out.’ I am never going to force an exit – it is not in our nature.

“For us, exits are a bit fraught, because we are concerned about what this does to our client’s business continuity. They get acquired – what is the acquiring company going to do with that customer base? They IPO – great, do they stay solo or do they become an acquisition target for someone? We want our investments to be the next Workday, the next Microsoft and so on. We want them to have a 10, 20, 30-year lifecycle, because that is what most of our enterprise clients are going to use them for. There are systems created in the 1960s that are still alive.”

Accenture also formed a strategic relationship with Partech Ventures, a leading venture capitalist firm headquartered in Paris with offices in Berlin and San Francisco, to drive innovation and support the startup ecosystem. Accenture Ventures last year hired Arnaud de Scorbiac to oversee its European investments and manage the Partech Ventures relationship

Finally, Redding, who previously spent five years as the global managing director in Accenture Labs, is working with several of Accenture’s clients to help them establish their own innovation capabilities, including corporate venturing as a means of bolstering strategic ambitions. He said last year: “Now Accenture Ventures is bringing our best to the next generation of future technology titans.”