AAA GCV Symposium 2019: Deploying a fund of funds or limited partner strategy

GCV Symposium 2019: Deploying a fund of funds or limited partner strategy

Mark Muth, director of corporate venturing at auditing and consulting firm PwC moderated a panel this morning that focused on direct equity investments in companies versus indirect investing through a limited partner position in a venture capital fund.

Jacqueline LeSage Krause, managing director of reinsurance firm Munich Re’s Munich Re/HSB Ventures unit, joined Bernhard Mohr, managing director of Evonik Venture Capital, the corporate venturing subsidiary of chemical producer Evonik Industries, and Jeanne Bolger, vice-president of venture investments at pharmaceutical company Johnson & Johnson’s Johnson & Johnson Innovation – JJDC unit, on the panel.

Muth cited data from GCV surveys in recent years, suggesting there may be more corporate venturers investing in funds as LPs than there were several years ago. He also explained that the major reasons for taking such positions often have to do with learning about investments and generating deal flow, though not all the panellists concurred.

Bolger said indirect investments had yielded mixed results for Johnson & Johnson and that it has a preference for engaging directly with startups, while Mohr said investing in funds had constituted a useful learning and deal flow-generating tool in the early days of the fund he manages.

However, Mohr said that in the case of Evonik Venture Capital some recent LP investments have helped it enter new geographies or sectors, such as China’s renewable energy space.

LeSage-Krause expressed scepticism about the value of investing in traditional funds to learn and enhance deal flow, while noting there are some opportunities in that area that may be valuable to a corporate investor.

LeSage-Krause finished by confirming that sourcing experienced people for the fund’s team, both internally and externally, has helped Munich Re/HSB Ventures establish its reputation and gain experience and deal flow.

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