Gaule: Give a brief description of the purpose of your fund.
Schmidt: We are a strategic investor and our purpose is to provide Robert Bosch access to innovative start-ups. The technologies we are looking for should be in the vicinity or at the forefront of Robert Bosch’s product roadmaps or open new business areas.
Although our reason for existence is strategic, Bosch expects us to achieve risk-adequate venture capital returns. Robert Bosch Venture Capital was formed in December 2007 and we started in January 2008 with a very small team. Since then we have added further staff and established strong relationships within the Bosch organisation. These relationships cover all of Bosch, across all hierarchical levels. Usually we introduce at least 10 times more companies to Bosch units than we invest in.
Gaule: Give a brief overview of the people in the team and the organisations you work with.
Schmidt: In the past fve years we have assembled a team of about 14 investment professionals with very diverse backgrounds regarding countries, technical and commer-cial expertise.
Most have also brought many years of very valuable venture capital-relevant experience. Robert Bosch Venture Capital’s main offces are in Stuttgart – close to Robert Bosch’s headquarters – and Frankfurt, Germany, but we also have an offce in Tel Aviv, Israel, as well as colleagues from Bosch North America advising on US investments and working out of a Bosch offce in Palo Alto, California.
Externally we are working with similar organisations like many other VC funds. Internally we keep close contact with Bosch business units as well as central research and work with them as a valuable source of experts. Apart from these more technical or market-oriented contacts, we work closely with Robert Bosch’s tax, legal, patent and fnancial departments.
Gaule: What is your view on the current market condi-tions for starting a new venture or supporting technology start-ups?
Schmidt: Current conditions are dominated by signs of a weakening global economy. This usually leads to lower investment activities and lower research and development budgets.
Starting a venture in such an environment still makes a lot of sense as one can expect the economy to return to growth and a well positioned start-up then to have good opportunities to grow.
At the moment capital effciency is critical and a technology start-up should try to use any idea to reduce capital expenditure. Usually many non-core processes can be outsourced. While the venture capital (VC) industry is focusing very much on internet, web-based and mobile device companies, one should not forget that the “internet of things” will not work without the corresponding “things”. There is and will be a need for innovative advanced hardware technologies.
Gaule: In the current market high-tech start-ups are finding it diffcult to raise funding. How could the VC and other investors support the sector better?
Schmidt: We see several attempts in the VC community to tackle this problem. Some VCs try to invest in very early-stage companies and to sell them before they will have to invest signifcant amounts of money in manufacturing or design equipment.
Others try to involve large corporations in ventures very early in the investment cycle and with a clear commitment that those corporations get some exclusivity to deals – for example right of frst refusal at exit.
Our belief is that we should work together in large and stable syndicates from the beginning and should be cognisant of and acknowledge honestly the cash needed to fnance the company to a successful exit.
During the time of the investment, VCs must support the start-ups, keeping burn rates as low as possible. Also, the early involvement of corporate venturers could provide the necessary insight into potential exit routes. With some of these risk management tools VCs should still be capable of achieving attractive fnancial returns with high-tech investments.
Gaule: Give an example of a recent venture that has developed from a corporate programme.
Schmidt: We have invested in three companies so far this year – Torqeedo, a manufacturer of electric outboard motors, IntrinsicID, providing hardware-intrinsic security, and Pyreos, a maker of infrared sensors and spectrometers.
Gaule: What do you do to relax?
Schmidt: That is a good question as most of my time is really dedicated to venture building. The time that is left gets dedicated to family, friends and sports such as hiking, cycling and skiing.