Give us an introduction to corporate venturing in DuPont.
The mandate of our strategic corporate venturing programme is to align directly with business and corporate strategy. Therefore, we strategically tie ventures in directly with at least one DuPont business.
The programme began in 2003 with the primary objective to enable technology access from venture-backed companies. We are generally direct investors in the earlier-stage startups – series A or series B funding rounds – however, we have also participated in series C and D funding rounds. It all depends on the specific situation. We look to hold a non-controlling interest at an initial position of less than 20%. In addition we request board observer rights.
Almost all of our investments are combined with a commercial agreement – joint development, supply and so on. This is still very important today, and to some degree this, I believe, over time has helped DuPont Ventures remain successful and viable within our company. Ultimately, with the hard business unit connection it can be easier to show direct value delivered.
We make some fund investments in circumstances where the funds are topically aligned with our key areas of interest and plans for growth.
What are the objectives of the corporate venturing unit and what do you feel is the balance between strategic and financial objectives?
Our primary objective is strategic. DuPont Ventures is accountable to deliver relevant open innovation options to our businesses. Venture investing is one tool that facilitates our engagement with venture-backed startup companies which we use on an as-needed basis.
There are several reasons why we would choose not to invest – if the startup company is not seeking funding, or is not interested in further dilution, we will look to develop a strategic partnership without a direct investment. What we strive for is that the businesses have skin in the game and are committed to working with the startup.
The financial performance of the investment is important too, but our top priority is the new business opportunity derived from the strategic collaboration.
Describe the coporate venturing team and who you work with in the wider organisation.
We have three full-time venture portfolio managers in Wilmington, Delaware, US, DuPont’s corporate headquarters. They are aligned with DuPont strategic growth areas – agriculture and nutrition, bio-based industrials, and advanced materials – but they are flexible according to our needs at the time. We also have part-time support in two other important locations – the San Francisco Bay area and Israel.
We are a global company and these portfolio managers have a global responsibility. Our experience has taught us that having a central location, or centre of excellence for corporate venture investing, brings additional value, but we know that a local presence can facilitate good dealflow. Credibility within the DuPont business units is an important criterion for a venture manager’s success, so we generally look to fill openings with very experienced people from either our technology or business development groups.
The DuPont Ventures team works across the company, connecting primarily with the strategic planners of our businesses, the business development teams and our central research organisation, which are all critically important to help funnel down the dealflow we see to a specific potential investment of interest.
My role is split between DuPont Ventures and our corporate research strategic planning and regional growth activities. It complements our venturing effort as our company’s strategic direction overlays with active areas of venture activity.
How do you work with partners and which types do you tend to work with effectively?
DuPont has a long history of working with other companies on new business opportunities so we have plenty of experience in this area. It is one of the reasons that we have had a long run of success with DuPont Ventures.
Venture investing is a tool that helps us with one of the most important elements of partnership – creating an alignment of objectives. For example, when two companies are both strategic investors in a startup, we are both trying to accomplish a similar objective – support the startup company in alignment with our mutual goals.
We like to work with companies that complement our position in the value chain, which leads us to look for arrangements with corporate investors that can offer complementary capabilities to a startup. Over the years we have developed strong relationships with several top-tier venture capital (VC) firms. When a VC understands the value a strategic investor can bring, not only as a potential exit, but also in enhancing the startup’s value opportunities by providing real growth, that is a good VC collaborator for us.
Give an example of your recent investments or divestments, or partnering technologies or startups, and a description of the benefits they have given DuPont.
NexSteppe is a startup that is looking at sorghum and switch grass as energy crops. These are crops that have not had much attention to their energy potential in the past. The beauty of our collaboration is that we can bring science to something that has not had that focus and there is an overlap with our agricultural business.
Nanocomp has a unique way to make carbon nanotubes which could have value in a wide range of applications. We made an investment and are able to be a collaborator on manufacturing scale-up, and we are able to focus on those applications within our DuPont Protection Technologies business.
In general we try to provide visibility to transformational venture-backed technologies to help inform our businesses that, should they choose, enable them to become part of the change so that we can maximise the opportunity.
Your organisation has been a strong supporter of US trade body the National Venture Capital Association’s (NVCA’s) corporate venturing group. What does it do and what is the importance of the collaborations?
Our goal in joining an organisation is to develop relationships and share best practices. We joined the NVCA early on because it was the only group. Today there are close to 100 corporations that are members and we have an opportunity to learn much more about best practices from a wider perspective.
Now, with so much attention on corporate investors, many outside individuals and groups are trying to cater to corporate strategic investors. We know that as members of the NVCA we will be guided toward some of the best and most credible of those groups.
What do you do to relax when you are not building ventures?
Suggest future interview ideas – email andy@roscahill.com and tlewis@globalcorporateventuring.com