On Thursday last week SAP’s corporate venturing unit made a big splash joining a $53.4m series D by social networking software company Lithium Technologies.
The deal was the latest in a line of interesting moves by SAP in the cloud, following its backing of Box.net and also a multi-billion dollar acquisition of listed cloud company SuccessFactors.
It looks to an outsider that SAP Ventures’ strategy is to get returns-based exposure to any changing dynamics in the software sector, which could threaten its parents’ strong market position, by backing cloud companies before their flotations (pre-IPO).
The pair of deals backing hot cloud companies Lithium and Box, coming alongside the headline grabbing SuccessFactors deal, mean market participants are even beginning to wonder if SAP Ventures is more strategically focussed than the returns-based philosophy it openly espouses. One entrepreneur running a cloud company, said: "SAP corporate has clearly realised the importance of SaaS [software as a service], and they are becoming more and more likely to do acquisitions (á la Success Factors).
"SAP Ventures has been on that train of thought for longer already, but with this new development there may be now more of a ‘foot in the door’ and ‘scouting out’ coming into SAP Ventures’ investment strategy, which previously were more just investments for maximum financial return." That said, SAP Ventures-backed software company Endeca sold last year to key SAP rival Oracle.
Market participants might think there is something more to the company’s corporate venturing unit’s evident interest in the business to business cloud sector, especially given the corporate venturing strategy and success of fast-growing peer, SalesForce, which has just backed Flotype.
Yet its corporate venturing unit still appears to be looking to maximise the money it makes on an individual investment. But do not be surprised if the next big venture deal in the business to business cloud sector has SAP’s name somewhere in the announcement – or maybe Salesforce.
(Editor’s note: Another big deal, Renmatix, was nearly analysed given the importance of sugars potentially replacing petroleum in the chemicals industry but will be looked at in a future case study for the industrial sector.)