Global Corporate Venturing Rising Stars Awards 2017: Michael Dovey

“The idea of a one-plus-one-equals-three scenario is very appealing to me and I believe that we offer our portfolio companies something traditional VC cannot.”

Only an entrepreneur can have such optimism so it is perhaps little surprise the quote comes from Michael Dovey, director of IAG Ventures, the corporate venturing unit of Australia-based insurer IAG.

Ron Arnold, head of IAG Ventures, said: “Mike’s path into corporate venturing has been a non-traditional one. He began his career in the financial markets, working in the structured derivatives team at UBS, but left after two years to pursue a more entrepreneurial path.

“In 2009 he founded a startup [AroundYou] which quickly grew to become one of Australia’s most popular online business review websites. During this time, he experienced the full startup journey where he raised seed capital, scaled the business to 50 staff and serviced thousands of paying customers over a five-year period. In early 2015 he was able to exit the business after it was acquired by another well-funded VC backed startup [Nabo, which is backed by Westpac, Fairfax and Seven West Media].

“As well as pursuing his own startup journey, he sought to support Australia’s entrepreneurial ecosystem by launching a quarterly startup event [66 Meetups] in collaboration with the city of Sydney to help entrepreneurs ameet, connect and grow’ with each other, with investors and with mentors. The event would regularly attract over 200 attendees and after two years operating the event, [and] management was transferred across to another well-established incubator [ATP Innovations].

“As well as his role at IAG Ventures, Mike is a part of Sydney Angels which is a member based investor syndicate that provides seed capital to early stage businesses.”

Dovey, who lives with his wife and three children right near Bondi Beach in Sydney, said: “I started at IAG 18 months ago specifically to help build out IAG Ventures, so I have been lucky to be a part of the journey right from the very beginning.

“Having originally started my career within a large corporate and then having the totally opposite experience of having launched, scaled and exited a startup, I felt that CVC would be the perfect combination of my previous experience and skills. I was also attracted to the idea of investing as a strategic investor where we are able to bring money plus strategic support to the investments we make.”

In October, Australia-listed credit and fraud decision technology ZipMoney acquired insurer IAG’s portfolio company PocketBook for A$6m, months after IAG Ventures had previously invested in the budget planner.

And, in August, IAG Ventures backed UpGuard, a US-based cybersecurity business, in its $17m series B round.

On UpGuard, Dovey said: “The round was oversubscribed and we were fortunate to invest alongside some other tier one VC firms including August Capital, Pelion Ventures and Square Peg Capital.

“I count the investment into UpGuard as our greatest success because we were able to clearly demonstrate the strategic value of IAG which is what got us a seat at the table alongside such other great investors and then we were able to move at the same pace as them during the closing of the round, which is something that typically is challenging for a large corporate to do.

“The biggest challenge as a CVC is striking the right balance between investing for strategic benefit versus investing with a pure return on investment (ROI) focus. While it would be a lot of fun to invest in everything we thought had great ROI potential, when you consider the scale of the entire organisation, you can begin to appreciate that this strategic benefit is likely a lot larger and a lot more valuable then just the pure financial ROI of the individual investment.

“In order for corporates to be successful in this space, they need to be able to clearly define their value proposition to startups beyond just money invested.

“This means giving an honest assessment of the corporates strengths and weaknesses and being as transparent about them as early as possible. This allows both the startup and the corporate to get on the same page quickly and to have a clear understanding of the investment process, timelines and how the two parties can support each other and work together post the investment being made.”