Stanley Ventures, the investment arm of Stanley Black and Decker, is cutting back its investment team from five to two people, GCV has learned, following a change of chief executive and and disappointing financial results at the world’s largest toolmaker.
Former CEO James Loree had been a strong champion for the unit, appearing on stage at the GCVI Summit in Monterey in June alongside Stanley Ventures president Dina Routhier to discuss the value of CVC. Routhier talked to GCV about Stanley Ventures’ plans to invest in startups that would support the company’s newly-created outdoor products business.
However, shortly after Loree handed over the reins as CEO to Donald Allan at the beginning of July, the company appears to have had a rethink about its commitment.
It is common for a CVC unit to come under pressure during management changes, and the situation will not be helped by Stanley Black & Decker’s poor financial performance. It disappointed markets last month when it reported that Q2 net income fell 81% from a year earlier to $87.6m.
The company’s stock price has fallen 50% since the beginning of the year, a steeper decline than the 14% drop for the S&P 500 Index as a whole, and its profits have been hit by increasing raw materials costs and softening consumer demand.
In response, Stanley Black & Decker is planning to cut annual costs cut by some $1bn by the end of 2023, with around half of that coming through simplifying organisational structures and reining back spending. Its investment arm has become part of this streamlining process.
Stanley Ventures is a $100m fund, set up in 2016 in order to access innovative technologies that would work with everything from power tools to engineered fastenings, oil and gas exploration equipment and household consumer products.
The team has built a portfolio of 42 startups covering areas as diverse as batteries, 3D printers and medical patient monitors. One of them, weapons screening company Evolv, reached a valuation of over $1bn and went public in a $1.7bn SPAC deal.
GCV understands Routhier will remain with the unit, which will continue to manage and support the startups in its portfolio.
Stanley Ventures is unlikely to be the only corporate venture unit that will face cutbacks during the economic downturn. To help investment units prepare for these challenges, GCV is running a free webinar — The CVC Survival Game – Delivering Value in Downturns — on September 14. Sign up here to reserve your place.
