In 2005, Dominique Mégret started Swisscom Ventures (SCV), the corporate venture capital (CVC) arm of telecoms firm Swisscom, an early-to-growth stage fund that runs on an evergreen model where returns are reinvested in new portfolio companies.
Mégret has been instrumental in the creation of a global network of information and communication technology corporate venturers. In July 2018, a SFr200m ($199m) external fund called the Digital Transformation Fund I was raised, with Swisscom committing about $50m and included an oversubscribed offering to third-party investors, that is currently co-investing alongside SCV III fund.
SCV targets early to later-stage developers of IT, cloud and communication infrastructure building on the unit’s heritage, in addition to disruptive digital applications covering verticals such as e-health, fintech, telecoms, e-commerce, e-government, e-mobility, energy, precision agriculture, industry 4.0 and digital media.
Around half of the capital is being invested in the Swiss ecosystem while the remainder goes to markets SCV is familiar with, encompassing the US, Europe and Israel. Initial commitment per deal is between SFr1m and SFr5m at seed to early-stage with follow-on investments of up to SFr22.5m per company.
After the success achieved by SCV I and SCV II spanning from 2007 to 2016 that had jointly backed 49 companies and achieved 25 exits, SCV III and Digital Transformation Fund I have carried on the momentum, having deployed more than SFr50m and invested in 12 companies, scoring one exit: content delivery software developer Fastly which went public on the New York Stock Exchange in 2019.
SCV’s earlier exits included data storage software developer Amplidata which was sold in 2015 to disk drive manufacturer Western Digital’s HGST for $300m, wifi technology producer Quantenna Communications floated on Nasdaq in 2016 and ServiceMesh, an enterprise cloud management company sold to technology services provider CSC for $250m in 2018.
The unit now plans to invest slightly more per transaction, Mégret told Global Corporate Venturing in an interview held in March this year. Its core trajectory of telecoms and IT services remains unchanged, though Covid-19-related travel restrictions have limited its deal activity to its home country for now.
Silicon Valley had been SCV’s focus outside Switzerland – with the US deals having purely strategic value centring on telecoms-related areas. Mégret is confident that the Swiss ecosystem remains strong and may have less competition from global investors that are now largely confined to their home countries.
“That is why we have been taking some bets in areas which seem, at this point, remote but are getting closer to the core business of Swisscom, such as e-health, the internet of things, artificial intelligence, wearables and even fintech,” Mégret said.
“So, overall about half our investments are important new technologies bringing efficiencies to our industry, while the other half consists of technologies that will or may become important to us, thus giving us differentiation in the broad customer management and experience field.”
Mégret joined Swisscom in 2002 as head of the group strategy division, a role he held for two years before he went on to create of the CVC unit.
Before that, Mégret was an entrepreneur in the UK, strategy consultant in the European telecoms industry, country manager for a Germany-based IT company and also a co-founder of venture capital firm Kick-Start Ventures. He holds a bachelor’s degree from the European Partnership of Business Schools (EPBS) and an MBA from Insead.
