Robert Bosch Venture Capital (RBVC) is expanding to China with its third fund and is also looking to invest more in agribusiness startups, managing director Ingo Ramesohl told Global Corporate Venturing.
Industrial product manufacturer Robert Bosch formed RBVC in 2007 to bolster its innovation by accessing promising startups and investing in strategically beneficial venture capital funds.
RBVC recently launched its third fund, with $170m of capital, and the unit provides up to €5m ($5.7m) at a time for startups developing healthcare, automation, energy efficiency, new materials, industrial services and industry-enabling technologies.
“We have had two funds in the past, and the second fund had been invested,” Ramesohl explained. ”We had reserves for follow-on investments from the second fund but it is basically closed and we had to start the next one. It has nothing to do with strategic changes or performance, it is just a logical consequence to open up the next fund.
“The investment areas and search fields are basically unchanged, however there is continuous adaptation according to Bosch’s strategies and activities. In practical terms, this means we have a wide field of search areas which we discuss with the business units, but we are also looking to peripheral search areas around the core business, and to complementary technologies or business models.”
The fund’s first investment involved helping Israel-based irrigation technology developer CropX to close a $10m series A round, part of a drive to expand the fund’s activity into agribusiness, Ramesohl said. Another new development is RBVC’s establishment of a legal entity in China which now allows it to invest in the country.
“We have made our first fund investment there, we are working on a second one and are also looking for direct investments,” Ramesohl said. “China is definitely a complete new area for RBVC, and we will start making direct investments out of Fund III.
“Whenever we start in a new region or a new sector, for instance precision agriculture, we are looking for cooperation with other funds with more expertise in those areas. We invest in other funds, we start deal flow together with them and then we go into direct investments. We have done the same thing in China; we have made the first fund investment and deal flow is coming now.
“There is a difference in China, certainly in terms of the market itself. We see a lot of business model innovation in China, using existing technologies and adapting them to the market, and that is definitely one field which is specific to China because the market itself is so big.”
An essential element in RBVC’s deals is that there is a strategic link with its parent company, and Ramesohl said Bosch has some kind of cooperation agreement in place with almost all its portfolio companies, though some of those are understandably protected by non-discloure agreements.
“There is a strong cooperation [model in place] and basically, there is cooperation with nearly all our portfolio companies,” he stated. “It is not always direct, sometimes it is indirect; if we are talking about semiconductor [technology] we are putting them on the roadmap for the next generation. We have robotics companies, software companies and there is always something.
“As an example, Optomed is a company that makes a retina camera to analyse your eyes, especially for diabetes patients. We invested in the company last year even though Bosch was already a collaborator, selling its camera in India, and we are now supporting them in increasing sales in China as well.”
One area RBVC is not looking into right now is 3D printing, and Ramesohl told GCV that unless a startup emerges with significantly higher performance or a unique selling point related to materials, the sector is effectively “over” for VCs. However, it is perhaps a sign of the times that the unit’s investments are increasingly being directed to software companies.
“If I scan our portfolio there are a lot of hardware-related companies but I see software as well so it is hard for me to say if there is really a big difference,” Ramesohl said. “We have invested in hardware and software, and more and more [of the investments are in] software, and the decisive thing is the software itself.”
– Photo of Ingo Ramesohl courtesy of Robert Bosch Venture Capital