Prologis Ventures, the investment arm of the US-based real estate investment company, is on the smaller end of CVC, with a team of 10, but has made 37 investments over the past six years.
“We take a very thesis-driven approach that allows us to be involved in several different activities while being a relatively small team” says William O’Donnell, managing director of the investment unit, which he co-founded in 2016.
The investment unit takes minority stakes in businesses of strategic value to Prologis.
Four major activities
“There are four major activities we are involved in – traditional corporate venture investing and sourcing external innovation, corporate development by running internal and customer co-innovation programmes, incubating new business lines and, in recent times, we have also started delving into traditional private equity and buyout transactions focused on the warehouse space.”
The wide range of activities came about organically, says O’Donnell.
“As a corporate venture arm initially, we were able to engage and do much more than look for external innovation that might be for our own use around real estate. We have been able to engage with global heads of business units of the corporate parent’s clients and help to foster strong relationships for both Prologis and our portfolio companies,” he explains.
That is how involvement on the business development side started and it was not limited to mere engagement with stakeholders. O’Donnell clarifies: “We have a cross functional team and initiatives, such as Prologis Labs that is run by our IT organisation, which experiment and create solutions that come from our touchpoints with customers and business unit leaders.”
Prologis Ventures is also involved in incubation and launching new business lines relevant to the customer base of the parent corporation: “We incubated a smart building business line and another one on mobility infrastructure related to EV charging. In both, we were aiming to address the pain points of our customers, whether it is more efficient facilities or charging stations for electric truck fleets, as we approach net zero.”
“We have made 37 investments over the past six years.”
William O’Donnell, managing director
The traditional venture investing the team carries out is by no means sporadic or infrequent. “We have made 37 investments over the past six years.” says O’Donnell.
“We have two senior advisors, six people in the US and two in China. The two senior advisors are retired executives who had significant history with Prologis, including one who was one of the co-founders of the company. The two professionals in China are focused on identifying venture investments in that market. We see a lot of opportunities there, but it is a relatively new initiative we launched in the middle of last year.
“For the businesses that we incubate, such as Mobility Infrastructure, we are hiring more people to run that specific business with, of course, a lot of support from other teams within Prologis.”
Like any serious corporate venturing arm, Prologis Ventures has a team member serving as a liaison between startups in the unit’s portfolio, the corporate mother ship and external clients, in addition to running an innovation council and a mentoring programme, with experts from the corporate parent teaching startups a variety of subjects – from accounting through marketing to technical areas.
How does a team manage to get so much across so many different activities? Partly they manage by leveraging a lot of Prologis internal expertise as well as interns and advisers. “We have by now figured out how to efficiently leverage internal resources. A lot of what we do is project-based, so we also bring in people with specific areas of expertise. We have figured out a way to leverage interns for time-bound opportunities. Sometimes MBAs, sometimes undergraduates.”
The verdict on team size?
O’Donnell says team size depends on the goals it has set. “If we were just doing corporate venture investing and nothing else, it could be done perhaps with three or four people for an average fund between $100m and $200m. That is, assuming the corporate parent already has strong innovation capabilities internally and we are just acting as a venture group. If you need more than that, obviously the headcount will have to go up.”
