AAA Lessons from the oil and gas front line

Lessons from the oil and gas front line

Give us an introduction to corporate venturing at Chevron Technology Ventures.

Chevron Technology Ventures pursues business solutions and technologies with the potential to improve Chevron’s core business operations. We do this by sponsoring and demonstrating emerging technologies and championing their integration into Chevron to improve business value. In addition to venture capital investments, the scope of Chevron Technology Ventures includes emerging technology evaluation, carbon and biofuels strategy, and design of technology pilot projects. The venture capital group, which I lead, was formed in 1999. In short, its objective is to scan the landscape to identify and create suppliers to address Chevron’s current and future technology needs.

What type of venturing process do you use?

We use a venture capital firm model, and manage our investments in funds established by Chevron as part of corporate appropriation for long-term projects. Our investment committee acts as the approval body for the investments. With our most recent fund – the fifth – the total portfolio under management exceeded $350m.

What is the typical annual investment, investment size and current order of magnitude of the investments?

We invest in three to five new companies a year with initial investments ranging from $2m to $5m. Including our follow-on round participation, our annual investments are around $20m a year

People are central to corporate venturing. Introduce the members of the team.

Chevron Venture Capital aspires to be admired and respected for our unique capabilities to add value to Chevron’s operations. Our knowledgeable team of nine professionals has more than 220 years of combined Industry experience. All of our members are recruited from various Chevron operating units with significant years of experience and bring a diverse mix of financial and operational experience to the team.

Is the performance of investments used to determine bonuses or in creating carried interest (a share of fund returns)? 

Compensation is based on performance, with a substantial portion tied to yearly metrics similar to executives in other Chevron operating companies. Performance metrics include financial returns as well as the ability of the invested technologies to create value in Chevron applications.

How do you partner your core business, research and development, and external partners?

Our investment committee consists of representatives of corporate and operating units of Chevron. We leverage Chevron’s extensive community of subject matter experts and operating units to identify and validate new technologies that may alleviate Chevron’s technology pain points. We do invest as part of syndicates, and welcome other corporate venturing units in our portfolio companies.

How do you measure your financial and strategic performance?

We track our return on investments, fund performances and the use of portfolio technologies in Chevron, and the impact of the integration of the deployed technologies in our operations.

Illustrate what you have described with a couple of examples of recent investments or collaborations.

Our most recent investment is Maana, a relationship-based search and discovery engine for big data on Hadoop [an open-source software framework for distributed storage and distributed processing of big data on clusters of commodity hardware]. When we invested in September, other participants for series A were Intel, General Electric and Frost Capital. Since then we have welcomed ConocoPhillips as an investor as well.

We champion the piloting and deployment of the technologies from our portfolio companies and others in Chevron’s operations. Two examples are testing of Zilift artificial lift systems in our Bakersfield operations, and piloting and deployment of Bitzer mobile – now part of Oracle – applications management solutions that allow employees access to corporate data and applications from their mobile devices. We facilitated more than 15 such technology applications in 2014.

Andrew Gaule leads the GCV Academy, developing the capabilities and expertise of organisations leading open innovation, venturing and corporate venturing programmes to drive strategic benefit. He also supports innovation programmes and collaborations in new value chains in global organisations. For future interview ideas email andy@roscahill.com and tlewis@globalcorporateventuring.com

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