In one of the trashy films watched on my last flight was a nice line: – cost is not the same thing as value.
The line was used to justify paying $20 for a hot dog but it could also be applicable to Samsung Venture Investment Company, the corporate venturing unit of the eponymous South Korea-based conglomerate, nearing its first potential exit from its European team set up two years ago.
Novaled, a Germany-based organic light-emitting diode (OLED) maker, plans to raise $200m in its US flotation and, as revealed by Global Corporate Venturing in September, Samsung was the sole investor in the last round for Novaled. In its regulatory filing, Novaled said Samsung owned 9.84% after this September round of €8.25m ($11m).
Samsung Ventures had joined the portfolio company’s other investors, which in April had included venture capital firms ECapital, Crédit Agricole Private Equity (Cape), Zweite TechnoStart, TechFund and CDC Innovation, having invested in primary shares and buying out others.
If the IPO gets away – an achievement for anything other than sexy consumer internet plays – then Novaled will validate a wider group of industrial tech companies thinking of listing, such as fuel cell group Intelligent Energy, and be a welcome boost to venture investors looking for returns.
That venture investors sold shares to Samsung so soon before its planned IPO is on the one hand surprising as valuations should be better – pricing is yet to be disclosed for Novaled – on public markets than the last round of private capital. The company had already been trading more than a decade, which is longer than the hold period for most limited liability partnerships making venture investments, since spinning out from the Technical University and Fraunhofer Institute in Dresden, Germany.
That the two research institutes remain shareholders is positive for the company as well as potentially a source of profits back to the academics – for more on this subject see our sister title, Global University Venturing.
The cost of selling in September, therefore, has provided value to those willing to stay the course and Samsung that leveraged its relationship as Novaled’s biggest customer.