Since joining ABB Technology Ventures (ATV), the venturing unit of Switzerland-based power and automation firm ABB, in 2010, Grant Allen’s focus as senior vice-president has been on identifying and investing in companies with strategic relevance to ABB.
These areas include industrial technology – including robotics, automation, internet of things and other advanced manufacturing – three-dimensional printing, energy efficiency, cyber security and data analytics. His deals have included Persimmon Technologies, which prints three-dimensional motor components, Scotrenewables Tidal Power, which makes floating tidal stream and run-of-river turbines. His exits include the sale of Validus DC Systems to ABB in 2012 and Lockheed Martin’s purchase of Industrial Defender in 2014.
Now based in Silicon Valley, California, Allen said the cyber security firm Industrial Defender sale for just under $200m had been his biggest corporate venture capital (CVC) success. He added: “This was a strategic investment for ABB but, like the best CVC investments, it hit both sides of the coin, coupling valuable strategic upside with a financial windfall.”
The deal helped validate Allen’s decision to move into corporate venturing, having previously been vice-president of Washington, DC-based VC firm Core Capital Partners for three-and-a-half years until November 2010.
He said: “I had been at Core for nearly four years, since graduating with an MBA from Wharton business school, and was looking at participating in another fund cycle or taking on a new challenge. What attracted me to this particular opportunity at ATV was twofold. First, that my investment theses in mobile communications, intelligence and security readily applied to the hardware ABB – and other existing industrially minded corporations – were already selling. This was the thrust of the Industrial Defender investment. Second, as a corporate investor, I could provide more tangible, more demonstrable value to my chief executives.
“VCs can sometimes pay lip service to value-add, which amounts – again, not universally, since I have worked with some phenomenally dedicated and experienced venture investors – to introductions, some assistance with hiring and firing and intermittently keen judgment in the boardroom.”
Saying that ABB has been fortunate to avoid “major cleantech cataclysms” that befell many of ATV’s peers, Allen said: “Our biggest challenges have undoubtedly been internal in nature. Maintaining consistent and ongoing business unit engagement is probably top of the list, but something we strive for, as an example, is ongoing monthly pull-ups and integration with ABB’s growth board. With time, too, the business units start to see the value of having an externally focused innovation arm and rely increasingly on us to be their eyes around the corner and, tactically, their eyes on the ground in Silicon Valley.
“We, of course, have the usual approval friction and groupthink issues that most strategic investors see crop up at least intermittently. Lastly, any investor would like to be able to move faster; for us, being able to react quickly and decisively, keeping a cadence that is acceptable to the fast-moving startups and other financial VCs we work with, is critical. Thankfully, my team and I have, with time, developed a few ideas to ensure we can unblock the ‘corporate constipation’.”
Allen said corporate venturing had made him a more reasoned and patient investor. He views working with large corporations as a misunderstood art and one not practised enough by startups. He said: “Each corporation is different, but I think my few years in this world has given me a roadmap of how to best navigate that engagement process without having it suck your resources dry.”
Allen anticipates eventually returning to traditional venturing, but cannot rule out another opportunity that appeals to his inner entrepreneur having founded a software company in college and worked for two other startups.
Allen said corporate venturing had dramatically matured over the past few years. Although he accepted there were still misperceptions around the role of CVCs, disagreements around when to engage strategic investors – and the impact of doing so potentially muddying the waters for potential acquirers – he thinks most corporates are astute enough to offset such dissensions.
He added: “The success of groups such as Sapphire Ventures and GV has served to cast a positive light on the good work CVCs are doing, too. But, just like financial VCs, the occasional bad actor – the one group that takes too long or fights for a more imposing right of first notice – can give the rest of us a bad name, so I would hope that, as an industry, we closely mirror our financial brethren, albeit with the bankroll, R&D backing and benefits of a large Fortune 500 company.”
Outside of ATV, Allen is an angel investor. He was a founding member of NextGen Angels and has so far spent six years at family office Keybridge Venture Partners, a $400m venture fund. Investment aside, Allen is a keen family man, cyclist and wine enthusiast. He is a big fan of Duke’s basketball team.