Launched in April last year as US-based aerospace firm Boeing’s corporate venture capital (CVC) unit, HorizonX was set up to invest in innovative aerospace technologies, business models and manufacturing processes.
But, perhaps as befits a company used to building things to a high specification and able to fly quickly, Michael Lohnert, investing director at Boeing HorizonX Ventures, said: “The reputation we are getting in the aerospace industry is that we are moving fast, while being thoughtful about our investment strategy and respectful of the entrepreneurs,”.
Headed by Steve Nordlund, formerly vice-president of strategy for Boeing Defense, Space and Security, the unit has screened 2,000 companies to date, and closed seven investments with was evaluating another 40 to 50 potential deals in their near-term pipeline.
The unit’s first two investments were in hybrid electric aircraft producer Zunum Aero and augmented reality technology developer Upskill were announced pretty much simultaneously with the fund’s launch, and were quickly followed by cognitive security analytics specialist group SparkCognition and C360 Technology, which manufactures 360-degree video camera systems.
In late 2017, HorizonX was also the lead investor in the first funding round of Pittsburgh, US-based startup Near Earth Autonomy, which develops autonomous flight technology, and in the seed round of aluminium alloys maker Gamma Alloys.
Having joined the unit from the outset, Lohnert witnessed its very first steps. “We are averaging about a deal a month since we launched in April, of which I was involved in about half of them,” he said. Lohnert played a key role in the unit’s investment in Spark Cognition, which was featured in CNBC’s 2017 disruptor 50 companies, and he sourced and led the Gamma Alloys and C360 Technology investments.
Brian Schettler, managing director at HorizonX, said: “Mike was a significant contributor to our initial success, having championed and led the successful investment in three of the seven companies we have added to our portfolio to date.”
Lohnert’s experience was a benefit in doing so much, so quickly. Having joined the company in 2004, he spent 13 years on the corporate strategy and mergers and acquisitions strategy side of the business, and served as senior principal responsible for emerging business opportunities, mergers and acquisitions and partnerships. He also had a mentoring role as program manager and instructor for Boeing’s enterprise strategy training course.
Lohnert said: “Thanks to these roles, I acquired a good grasp of Boeing’s business strategies and built a network of Boeing colleagues across a diverse set of fields and expertise, whom I can ask to help me assess companies at any time.
“This, coupled with my experience prior to joining Boeing, made this role at HorizonX Ventures a natural fit for my background.”
Before joining Boeing, Lohnert was director of energy investments for Montauk Energy Capital, a private equity group for focusing on the alternative energy, natural gas and electrical generation sectors. Prior to that, he served as foreign currency options analyst and nuclear decommissioning trusts accountant for Bank of New York Mellon. While in Zurich, Switzerland, Lohnert also spent time at Credit Suisse.
Finally, he also worked at Ashland’s specialty chemicals division in Columbus, Ohio, US, where he was part of the strategy and corporate development groups.
But even with so much experience in the team and dealflow coming into HorizonX, Lohnert said the CVC industry was still struggling for proper recognition. He said: “Right now, there are some VCs who do not want to work with CVCs.
“I think that’s partly because many VCs might still think of CVCs of the last cycle where units were most likely to hire long-tenured internal staff who did not necessarily understand the VC and startup ecosystems, and imposed conditions such as exclusivity clauses or first right of refusal, which can both be very detrimental to a startups’ exit potential.
“I think there’s a bit of a perception that we still need to change, and that’s probably the biggest struggle in the ecosystem, rather than dealflow.”
As corporate venturing becomes more professional though, things are likely the change for the better in the future, he added.
Reflecting on his unit’s progress, Lohnert said: “HorizonX is still very young, so what we need to do is get that reputation in the market of an investor that adds value, and who founders want to work with.
“I think if CVCs act more like VCs while also bringing all of the benefits of technological credibility and channel, that is a winning combination.”
Another phenomenon that CVCs should be wary of, Lohnert added, is what he calls “deal fever and valuation creep,” referring to the corporates’ tendency to invest too much too soon, and through excessively big rounds. “Investing less money through staggered rounds to burn down risks would better cater to startups’ needs,” he said.
Aside from his responsibilities at Boeing, Lohnert is on the board of directors of Pasadena Angels, ranked by Forbes as a top 10 angel investor group. He is also on the board of San Francisco-based renewable energy startup, Nevados Engineering.
Lohnert holds an MBA from the Fisher College of Business at the Ohio State University, where he concentrated on investment management and strategy. His bachelor’s degree is also from Ohio State, with dual majors in finance and real estate finance. In addition, he completed entrepreneur and venture capital executive program at MIT’s Sloan School of Management and University of California’s Berkeley Haas School of Business.
In his free time, Lohnert enjoys taking part in open ocean outrigger canoe paddling competitions, which is a sport in which team work and discipline seem to be just as important as with CVCs.