Rising Stars Q&A – Erning Cao, EVC

Bernhard Mohr, managing director of Evonik Venture Capital (EVC), the corporate venture capital (CVC) arm of Germany-headquartered chemical producer Evonik, said of Erning Cao, a China-based investment director: “I am delighted to nominate an excellent candidate from our Evonik Venture Capital for the Rising Star Award. Erning Cao joined our team in 2018 to set up and run our VC operations in China, based in Shanghai. Prior to joining EVC, Erning had an impressive working history with Evonik, Siemens and Alstom.

“Upon joining EVC in April 2018, Erning managed to build up a strong deal flow pipeline that already originated three direct investments in China for the past 14 months. This includes Meditool, a startup specialising in PEEK (polyether ether ketone) 3D printed implants for neuro and spinal surgery and Smart AHC, a specialist in artificial intelligence for animal husbandry. Equally important, through Erning’s efforts, EVC is now positioned as a well-recognised investor and partner in the Chinese and Asian startup environment.”

1. First, just give us a quick overview of who you work for, what you do, and how long you have been doing it.

I am an investment director at Evonik Venture Capital (EVC), taking care of the activities in Asia. I have been stationed in China since April 2018 as the first EVC staff member in Asia.

Since then, I have tried to be better connected with the regional startup ecosystem, build up a strong deal flow relevant to Evonik strategy and innovation growth ambition. Apart from taking care of two fund investments, three direct investments have been originated and concluded by now.

EVC was my first assignment in the venture capital arena. Before that, I worked for 22 years in various finance and business administration functions for Alstom, Siemens and Evonik.

 2. What attracted you to CVC? 

First of all, I find that CVC is perhaps one of the very few opportunities that I could not only utilise all my past experiences gathered from different functions and regions but still have the opportunity to add to my knowledge every day.

I enjoy very much to meet and talk to those talented and passionate peers and entrepreneurs who are trying to make a positive difference in the world.

Through the venturing activities, I feel like an entrepreneur who brings together the startups and Evonik to create value and make the world a better society jointly.

3. What have been your greatest successes at your unit? 

I set up the EVC internal and external processes in the region from scratch, with three direct investments that originated and concluded during the last couple of years. These are the first direct investments for EVC in Asia.

I integrated myself with the startup ecosystem in the region by participating in various events and conferences as a speaker, panellist or jury member.

4. What have been your biggest challenges? 

The biggest challenge for me is to learn quickly but in detail all it takes to be a good venture capitalist. To do that it is not enough to learn from my more experienced peers in the EU or the US, I also need to understand the regional differences and adapt to local VC market standards.

Another noteworthy challenge is to coordinate and collaborate with co-investors with so many diversified backgrounds, for example, industrial investors, local investment funds, global investment funds, local CVC and multinational CVC.

It is in the meantime an interesting learning process for me.

 5. What is your main professional ambition for the future? 

Asia VC industry accounts for more than one-third of the world in terms of both the number of deals and invested amount. EVC started operations in Europe and North America with many successful investments already in the past eight years. I wish to catch up with my peers quickly and contribute at least one-third of investments from Asia.

I have also the ambition to invest in a unicorn company in the near future.

6. What do you think all CVCs could do better to make it a stronger industry?

Comparing to independent venture capital firms, CVC is still small in terms of resources and coverage. I believe CVC can be much stronger from more interactions and collaborations. From this sense, Global Corporate Venturing can be a pivotal platform for us. Another approach could be to establish some kind of regional CVC industrial association to promote our activities jointly.

7. What are some of your corporate parent’s technology needs and corporate strategy amid the pandemic, as well as your CVC unit’s pain points?

EVC investments focus on innovative technologies and disruptive business models in the fields of nutrition and care, speciality additives and smart materials, as well as enabling digital technologies. This did not change simply because of the pandemic.

We are for sure more prudent and selective on investment targets in terms of financial and strategic relevance.

We need also to support the portfolio companies to tide through the situation more effectively. This means extra challenges as well for CVC in short term. 

8. And, finally, for colour, what did you do prior to CVC or in your spare time?

I used to be a good go chess player during school time. Although artificial intelligence has recently been able to beat the best of humankind in this game, my interest in it has not at all reduced. I still enjoy playing a few games online from time to time, with humans, not AI.

However, the most relaxing time for me is to play with my three dogs and one cat at home.