SAP Ventures, the corporate venturing firm affiliated with New York-listed software provider SAP, has raised $651m for its second direct investment fund to take its total raised to more than $1bn in the past 12 months.
The SAP Ventures Fund II targets later-stage entrepreneurs and complements the $405m SAP HANA Real Time Fund, a fund that has so far committed to 11 third-party, early-stage venture capital funds. Nino Marakovic (pictured), chief executive of SAP Ventures, said SAP was the sole limited partner in both these funds but its corporate venturing unit is expected to open future funds to outside investors within the next five years given its “top quartile” track record.
Founded in 1997, SAP Ventures has invested in more than 125 companies across five continents but set up its first dedicated fund of $353m in 2011, whose portfolio has primarily been in the US and has included LinkedIn, Endeca, OpenX, DocuSign, Fitbit and Box.
In what Marakovic said had been a “dramatic year for us”, SAP Ventures is planning its 13th exit event this calendar year with the planned flotation of France-based Criteo on the Nasdaq stock exchange. In the first six months of this year, Criteo lost $6.4m on sales of $252.7m.
Five of SAP Ventures’ other portfolio companies have completed their initial public offerings this year, including Criteo’s advertising technology peers Marin Software and Tremor Video, and Control4, which are all trading below their flotation prices, while Just Dial is trading above its flotation price and Violin Memory shares fell upon IPO.
Seven of its portfolio companies were acquired: Aepona, Apriso, Datria, ExactTarget, Ignite, ScaleIO and Voxeo.
SAP Ventures also said it was setting up a 10-person business development team under Colston Young, director of operations, to enable its portfolio companies to tap into SAP’s enterprise ecosystem and doubling its overall team to 20.
The US, Europe and Asia-based business development team are expected to give entrepreneurs and start-ups access to multiple strategic revenue channels available through SAP Ventures’ limited partnership in venture capital funds and SAP itself, which has more than 13,000 partners and 248,000 customers around the world.
Vishal Sikka, member of the executive board at SAP, said: “SAP Ventures is an integral partner of the innovation drive and intellectual renewal happening at SAP. They are helping us build a broader ecosystem that includes some of the most innovative founders, developers and venture capitalists.”
Marakovic said: “We represent a new breed of venture capital funds. VCs that raise money from people with no added-value is antiquated. We are in a unique position of being independent and yet having unparalleled access to one of the world’s largest global ecosystems of enterprise customers and partners.
“As a result, we help entrepreneurs tap into proven approaches for customer acquisition and international expansion, such as helping EactTarget and DocuSign go into Europe and LinkedIn in India. They get the best of both worlds — an unmatched mix of independent funding and the relationships of an enterprise powerhouse.”
He added from his Palo Alto-based headquarters that he wanted to service other complementary corporations wanting to add corporate venturing as a fourth arrow to mergers and acquisitions (M&A), partnering and internal research and development (R&D).
Marakovic said: “M&A can be accretive if done right and most technology companies have grown from acquisitions rather than internal R&D after the first successful product, with HANA being the exception. We look to go the extra mile for SAP and while we have a Chinese wall on details from portfolio companies we share on what is a hot or not company, insights into new spaces and what other companies might be looked at for an acquisition.
He said SAP had bought five of its portfolio companies and its recommendations were responsible for about 10% of its leads and deals.