Gaule: Give us a brief introduction to you.
Steel: I am responsible for our venturing activities which include Syngenta Ventures, our direct investment vehicle, and a small number of external investment funds in which we are a limited partner [investor].
Gaule: What key trends – demographics, technology, emerging markets – are driving change at
Syngenta?
Steel: One of the biggest issues affecting our business and the global population is food insecurity. It is shocking
to realise nearly a billion people go to bed hungry every night. The global population is expected to increase
to around 9 billion by 2050. That is an additional 80 million people to feed every year until then. To support this
population surge farmers need to achieve at least a 70% increase in food production. They will have to do that on
the same amount of land cultivated today without irreparably damaging our planet. The sustainable intensification
of agriculture is about the farm being more productive, getting more out of the resources and inputs we use –
essentially growing more from less. Key to achieving this step change in productivity is the acceleration of the rate of innovation in agriculture. Syngenta’s ventures activities support the more than $1.2bn a year that we spend on research and development (R&D). By tapping into external innovation we can broaden the solutions we can offer to growers worldwide.
Gaule: Give a brief description of the purpose of your venture unit and when it was formed.
Steel: Syngenta has been involved in venturing since its formation in 2000 from the merger of Novartis’s agribusiness and AstraZeneca’s agrochemicals business. This was initially through the investment portfolio that we inherited as part of the merger. But in 2006 we took a more proactive approach by co-establishing one of the first agriculture- focused venture funds with Dutch company Life Sciences Partners. In 2009 we established our own direct investment vehicle, Syngenta Ventures. It invests in companies which accelerate our deployment of innovation, be this new technologies or new business models. Strategic relevance is our key focus and our investments range from seed equity to growth equity in established companies. We are the leading venture investor in agriculture.
Gaule: How has the purpose changed from the original investment approach with Life Sciences Partners?
Steel: Syngenta Ventures puts more emphasis on the strategic rationale behind deals because we have experienced first-hand how mutually valuable these relationships can be. Alongside the investment agreements, our business teams will typically negotiate a collaboration agreement.
The breadth and depth of this provides a good indication of the potential strategic value. We have also broadened our investment approach from initial seed financing through to growth equity.
Gaule: Give us a brief overview of the people in the team and the partners you work with.
Steel: We have an experienced team of investment professionals from a diverse range of backgrounds. All have
first-hand investment experience in either corporate venturing or venture firms. Four of the team are based in
Research Triangle Park in the US and two at Syngenta’s global headquarters in Basel, Switzerland. The majority of
our investments to date have been in the US and Europe, and we are now extending our reach into Latin America
and Asia. We prefer to invest in syndicates as the value and insights that financial and strategic investors bring is often different, and working together can maximise the value that both groups bring to portfolio companies.
Gaule: How do you connect the venturing unit to the core business in R&D and product development?
Steel: This is one of the bigger challenges in any large corporate. Our connectivity goes beyond R&D and product
development into the commercial units and business development teams. Innovation is at the heart of Syngenta
and our corporate venture activities are just one component in our broader strategy. We try to understand the strategic priorities of the organisation so that we canwork with the other functions, such as R&D, M&A, licensing,
collaborations and business development to provide a co-ordinated approach. We invest a lot of time with our
stakeholders in the business as they are a key source of deal flow and an invaluable resource for assessing opportunities.
It’s also important that they see us as a valuable partner so that we can develop a long-term relationship
that incentivises collaboration.
Gaule: What has been your most interesting recent deal?
Steel: Last summer we invested in a Norwegian company called Agrinos. The company has developed novel technologies that strengthen the soil-based microbial ecosystem, increasing yield and crop quality. This is an interesting deal as it represents an investment at the growth equity end of our investment range. The business already has significant revenues and is at a much later stage than the typical R&D platform or early stage investments that we make. Like all of our investments there is a strong strategic component to our investment rationale. We view ourselves as a partner who will accelerate Agrinos’ market penetration and growth across key agricultural regions.
Gaule: What is your view on the opportunities for corporate venturing?
Steel: The current headwinds facing the traditional VC model are well documented. The resulting funding gap
has provided opportunities for corporate venturing, but the year-on-year growth we are seeing in corporate venturing is driven by more than just this. Many corporates now recognise the role that venturing can play in accelerating innovation, particularly with regards to developing breakthrough and adjacent technologies. Early in-house research is complemented with innovation from the external start-up environment. Corporate venturing has permanently established itself as an important component in the open innovation toolkit.
Gaule: What do you do to relax?
Steel: I have two children under the age of three, so I generally come into the office to relax. When at home I love spending time with the family and we tend to make the most of living in Switzerland by trying to get outdoors as much as possible. I am looking forward to when the kids are old enough to ski, which judging by the locals, should not be long.
Steel will be leading the discussion at the Corven CV Senior Executive forum in June.
You can get free previous audios of Gaule’s Question Time at the iTunes store – search Corven Group – and as audio downloads from Global Corporate Venturing or from www. corven.com/corven-networks.
To contact Andrew Gaule and for future interview ideas email andrew.gaule@corven.com and tlewis@globalcorporateventuring.com