For many in Silicon Valley, the perfect example of technology and venture investing is found in Hewlett-Packard (HP), the information technology (IT) firm founded in a Palo Alto garage by two Stanford University students in the 1930s.
While there may be more career changes ahead for Ray Schuder, a managing director at Hewlett Packard Ventures, he has, for now, in his own words, “day-tripped” back to the firm where he first worked as a research and development engineer in the late 1990s. His return to HP was precipitated after his wife “finally told me I had to get a job” after studying for too long at Stanford University.
He now leads HP’s strategic investment arm, which from the beginning of November 2015 became part of Hewlett Packard Enterprise (HPE) after a de-merger of Hewlett-Packard into two businesses.
Hewlett Packard Ventures is the strategic investment arm of HPE. It focuses on mid- to late-stage enterprise IT investments in cloud, data centres, security and big data.
The programme was launched in 2014 and Schuder came on board in January that year with three quick deals.
Microsoft acquired his first deal, 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 of our deals.”
His other deals in 2015 included Chef – formerly known as 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 legendary Massachusetts Institute of Technology professor Michael Stonebraker.
Schuder is a board observer at both companies, a position he also held at Adallom.
Schuder has become used to rapid success. Before Hewlett Packard Ventures, he co-founded and served as the head of 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.
Of ViVu, Schuder said: “That set us on a good path at AMD Ventures.
“Other companies that successfully exited, which I invested in were Aviary and Mixamo, both bought by Adobe.
“In addition to those exits, other investments I have led have enjoyed successive up rounds of financing, such as Matterport, Tango and Bluestacks.
“With all the investments at AMD Ventures, I also closed technology collaboration agreements and through those created many great differentiation proof points that we used at public relations events and in the press.”
Before AMD, where he was named as part of the Global Corporate Venturing Powerlist in 2014, Schuder was a principal with venture capital firm El Dorado Ventures from 2005 to 2010. Before that, he spent three years as an investment professional with Pequot Ventures and SVB Capital.
Around 2010, Schuder took the view that the market for traditional venturing was slowing. At the time, he took careful note of the high levels of contraction and consolidation.
“I saw a growth opportunity in corporate venturing because corporates were looking to get back into the business after the contraction led by the internet bubble.
“My thesis proved to be true and the industry has more than doubled in active units over the past five to six years.”
However, while his deal spotting and market analysis have proven to be transferrable skills, working for corporations has brought other challenges.
He said: “At AMD Ventures, I had four chief executives and a few complete turnovers of my investment committee. I persevered and continued doing deals and driving strategic impact under all regimes. While difficult, it was character building, to say the least.”
Of the future, Schuder said: “I would like to continue investing in great companies, building relationships with entrepreneurs and driving financial and strategic value for Hewlett Packard Ventures. I would like to see Hewlett Packard Ventures achieve the success of other long-standing corporate venture units that have paved the way.”
To do this, the industry requirements are clear: “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 makes it all sound so simple. For Schuder, it probably is, given that he has three master’s degrees from Stanford University and graduated with the highest honours from the University of California, Santa Barbara, in mechanical engineering.