There are three main constituencies corporate venturers try to work with and ultimately impress – their senior management, other venture investors and entrepreneurs.
In a highly-networked entrepreneurial ecosystem such as Silicon Valley, being without a good reputation among entrepreneurs means the chances of working with top-tier serial founders are low indeed. So it was telling that Ray Schuder, managing director at HP Ventures (Pathfinder), was praised by this group in his nomination for the GCV Powerlist 2017.
Andy Palmer, CEO at Tamr, for last year’s award said: “I have worked with many of the top venture investors of every flavour, including NEA, Kleiner Perkins Caufield & Byers, GV. My experience with HP Ventures has been exceptional in that context.”
He added: “CVCs come and go so I appreciate Ray’s continuity even if HP’s winds change. When I started Tamr I was very selective with VCs but I also wanted a strategic that could offer value beyond cash, so it was natural to talk with HP. I was sceptical they would be slow-moving as a huge company and credit having the opposite experience with Ray. He made the elephant dance.
“HP beat another customer to lead. They bring value beyond money with Ray as quarterback. Ray really understands what we need – revenue and faster growth. He is very unique – other CVCs talk the talk but delivery is a whole different thing. Ray is interested in us. I trust him deeply.”
Schuder, in his own words for his naming as a GCV Rising Star 2016, had “day-tripped” back to the firm where he first worked as a research and development engineer in the late 1990s. His start at HP was precipitated when his wife “finally told me I had to get a job” after studying for too long at Stanford University.
With the departure of Lak Ananth to head Siemens’ Next47 corporate venturing unit, Schuder now leads HP’s strategic investment unit’s deal team, which from the beginning of November 2015 became part of Hewlett Packard Enterprise (HPE) after a demerger of Hewlett-Packard into two businesses. The group’s other managing directors are Vishal Lall and Paul Glaser.
The program was launched in 2014 and Schuder came on board in January that year with three quick deals.
Microsoft acquired his first investment, Adallom, for a reported $320m. While Schuder declined to disclose the sale price, he said the exit after its $30m series C round of financing in April came “just under five months after I closed the deal”.
He said: “It is a personal record for internal rate of return [a measure of annual performance] in my career and has helped validate our model. With Adallom, we achieved a trifecta [investment, HP as a customer and HP as a go-to-market partner] and this is something we aspire to do in all our deals.”
Other deals in 2015 included Chef (formerly Opscode), which raised $40m in September 2015 less than a year after a development partnership with HP, and Tamr, which raised $22.5m in June’s B round of financing after spinning out from research conducted by Prof Michael Stonebraker at Massachusetts Institute of Technology.
Other deals include the $90m round for Cohesity, a US-based secondary storage business launched by ex-Googler and Nutanix co-founder Mohit Aron. Its series C round was co-led by existing investors GV and Sequoia Capital with the corporate venturing units of Cisco Systems and HPE as strategic investors.
Schuder has maintained this pace and added greater support for portfolio companies. He said: “I closed three new investments [in 2016] where I serve as a board observer – Hexadite, SafeBreach and KeenIO.
In a continuation of a pattern, two of those deals have since been acquired, while Schuder said SafeBreach was “an investment I sourced an led in their A round successfully raised a B round at a nice step up from the A”.
Microsoft acquired Israel-based Hexadite for a reported $100m, while at the end of the year Scaleworks bought Keen IO for an undisclosed amount. Schuder said of Hexadite: “This was an investment I sourced and led in their A round.”
Schuder has also led Hewlett Packard’s investments in Chargifi, which raised $8m in April’s B round following Schuder’s lead in it’s earlier A round, and Platform9, which closed on $22m for its C round last July.
Schuder said: “Chargifi… is also our first investment in Europe (HQ in the UK).
“I sourced and led an investment in Platform9. This was their C round. We moved quickly to a commercial partnership and to date it is the fastest commercial deal we have closed post investment in a net new opportunity for HPE.”
Schuder has become used to rapid success. Before Hewlett Packard Ventures, he co-founded and led AMD Ventures, where he created an early exit for video software company ViVu, which was sold to communications company Polycom. The deal took place approximately six months after investment.
He was a principal with venture capital firm El Dorado Ventures from 2005 to 2010, and before that spent three years as an investment professional with Pequot Ventures and SVB Capital.
To Schuder, the industry requirements are clear and demonstrated through his company testimonials. “In general, corporate venturers need to behave as a good actor in the ecosystem. Shorten lengthy processes and do not introduce non-standard deal terms. Make sure you deliver on strategic value and commitments. If we all did this, we could make a lot of progress improving our reputation among pure-play venture capitalists and entrepreneurs.”
He spends the time with business colleagues to help spread the good word. He said: “I presented to HPE’s Customer Advisory Board at our annual meeting in London in Feb 2018. In addition to my presentation I moderated a panel with four of our portfolio companies.
“I delivered a keynote to 2500-plus people at our largest pre-sales conference of the year in The Hague in March of 2018. The focus of my keynote was innovation and our corporate venturing program.”
He makes it all sound so simple. For Schuder, it probably is, given that he has three master’s degrees from Stanford University and graduated in mechanical engineering with the highest honours from University of California Santa Barbara.