Since the beginning of February, Michael Mahan has been managing director at Stanley Ventures, the corporate venturing unit of Stanley Black & Decker (SBD). Previously an investment manager, he has been at the unit since its launch in 2016 under vice-president Larry Harper.
Stanley Ventures is a purely strategic unit, investing in the order of $15m to $20m a year from SBD’s balance sheet. It makes eight to 10 deals a year – 19 in its first two years.
As a strategic operation, Mahan said the unit “stays extremely close to Stanley business units”. He added: “We interact with multiple SBD core and innovation teams almost daily, and we try to impact SBD with every deal by aligning them with one or more business unit strategies.”
That said, Mahan cannot make plays across the venture ecosystem. Instead, the focus is on the early stage. He said: “Our methodology is focused on driving top-line growth at Stanley and top-line growth at the startup. Primarily, we are targeting $100m-plus opportunities, meaning a Stanley commercial program coupled with startup innovation delivering $100m in annual revenues within three years. We invest early-stage in order to find the most forward-looking technologies before our competition is aware of them. We want to help innovative startups introduce breakthrough technologies, and, partnering early, help them leverage more Stanley resources than later-stage companies.”
Early-stage entails risk, but part of that risk is mitigated by how the unit’s dealflow works. While some of the deals come through networks, others come from existing SBD customers – startups they like working with – meaning startups come to Stanley Ventures with “customer validation of their technology – a major plus”, in Mahan’s words.
Customer validation notwithstanding, risk remains, from both business and technological perspectives. Yet Mahan is excited by the technology out there, particularly additive manufacturing – 3D printing.
“It is making some interesting strides. Printing things like concrete, ceramics and batteries has enormous potential and could be very disruptive to several industries. Blockchain on the other hand seems to get a lot of headlines, but I have yet to see many convincing applications thus far.”
Perhaps that is the nature of Stanley’s business, but Stanley Ventures’ portfolio is diverse, perhaps surprisingly so for a unit with such a strategic bent. In part that is because SBD is much more diverse than initially meets the eye, as Mahan says, “more than just a tool company”, citing its security and fastening businesses as key sectors.
“We have fasteners in every iPhone, and electronic doors at retail locations and restaurants all over the world. Every deal we have done is tied to some breakthrough strategy and has a path to bring commercial success to both Stanley and the startup. We define a commercial plan together up front, before the deal is even negotiated, so that everyone is clear on how we will go to market together once the deal is done.”
That offering made Stanley unique for potential partners, with a level of coordination that only direct core business competitors could match, let alone venture competitors. Mahan goes further: “It is actually Stanley and our enterprise-wide focus on breakthrough innovation that sets us apart from others. Our startups work with Stanley innovation teams that have a mandate to roll out new products and technologies the world has never seen. Our Flex-Volt battery technology was the first product rolled out by Stanley innovation teams, which has been a massive success.”
Mahan is particularly enthused by Arix Technologies, for which Stanley Ventures led the seed round last year. The US robotics company, out of Yale, works in the oil and gas space, and Mahan is not shy about its potential.
“Everything about this company excites me – from the CEO who previously worked at Exxon, to its extremely innovative robotics technology, and especially the business case for why its products will be successful in the market and add value to customers. It is making strong progress with several key players in the industry and having lots of success with early field trials and partnerships. I see this company taking off in a big way over the next 12 to 18 months.”
This year will bring other commercial roll-outs with startup partners, with Mahan anticipating strong results. It is after all, his team now, and he is excited to lead it. The portfolio is beginning to mature after two years, with products launching and exit opportunities arriving. This leads to a fresh challenge – portfolio management. As Mahan said: “Portfolio management will be extremely important as our portfolio ages and grows, and I am looking forward to playing a role in shaping our strategy moving forward”.
Mahan’s intention is stay “small and agile” with his team, even as it covers more ground and works in greater depth with SBD’s business units. While it is possible it may add an individual or two, it is clear Mahan is comfortable, and confident, with what he calls a “small but mighty team”.
Part of that new ground Mahan hopes to cover might include new geographies. The CVC space is dominated by three or four regions – North America, Europe, China and Israel, supplemented by Japan. Yet Mahan, in part led by SBD’s emerging markets team, is also looking at India and Latin America. They may not be mature markets yet, but Mahan is keeping an eye on the opportunities there.
As a former startup staffer himself, Mahan knows what it is like to work on the ground floor of the innovation ecosystem. Running Stanley Ventures places him on a different tier, working with startups. While he may not have the capital or the team of a larger CVC unit, Mahan is looking forward, and Stanley Ventures is looking up.