Gerald Schumann, partner at law firm DLA Piper, moderated a panel on balancing the differing interests of stakeholders in multi-corporate venture capital funds, on the second day of the Global Corporate Venturing Symposium in London.
The discussion included Dominique Mégret, head of Swisscom Ventures, the corporate venturing arm of telecommunications firm Swisscom, and Andrew Hinkly, managing partner of AP Ventures, the VC firm originally anchored by mining company Anglo American Platinum and the South African government-owned Public Investment Corporation.
Schumann, Mégret and Hinkly were joined on stage by Samuli Sirén, founder and managing director of VC firm Redstone Capital, which provides its expertise to structure funds for partners including corporates.
Sirén explained the idea for Redstone Capital had come about with the realisation that corporates engaging with VC investing often lacked an understanding of how to amass a portfolio with strategic value. It therefore made sense to work with corporates through VC funds to aid with the process.
“Working with corporates from multiple backgrounds and some that are well established and ongoing. We help them get ahold of this space.”
Asked why an established CVC unit would pursue strategic value from VC funds with greater complexity rather than investing on standalone basis, Siren said: “We have been fortunate to have been able to deliver for firms, we have no money issues.
“At the same time the VCs also know that these investments have the same LPs as we do and so I think it is a matter of professionalism to show the financial and practical track but to still have strategy people to come in… it is about balancing professionalism with external funding with a strategic mindset.”
Hinkly added that where purely strategic situations arose for profit-led VC funds with corporate backing, the best approach was to communicate the decision-making process to investors.
He said: “You will find opportunities and situations which are purely the strategic opportunity or purely a strategic project that make absolute sense to [a particular] corporate. And the way it is solved is the [break] in integration that you have between your processes and your interactions with the corporate.
“As long as there is that understanding of what they are trying to achieve and you are open in the same way to finding, networking, stepping out and not being blinkered.”
From the corporate’s perspective, Dominique Mégret said: “A very important point is finding the right balance between keeping to close to [the unit’s parent company] or risk not doing anything because we are too close to the financial [motives] of the LPs.
“So we want to keep that balance and I think we do in 99% of deals. Not 100%, but 99%. At the same time I think that over the longer term, from the perspective of a corporate VC, to have external benchmarks and contracts that are helpful. People understand [the funds’] approach much better because we have the external contract.”