Gaule: Give us a brief description of your fund.
Morris: Dow Venture Capital is an investment arm of Dow Chemical Company focusing on strategic investments that enable and accelerate Dow’s new business growth.
Growth and innovation are Dow’s primary pillars for achieving near and long-term financial targets. With a focus on the strategic interests of Dow’s higher-margin speciality and performance businesses, Dow Venture Capital seeks investments in start-up and early-stage companies and technologies with high growth potential where Dow can make a significant impact.
Dow’s broad sector interests include alternative energy solutions, including photovoltaics and wind, electronic materials, energy storage, alternative feedstocks and water treatment. We are also interested in automotive, agricultural sciences, building solutions, and power and data transmission and distribution.
Dow Venture Capital has an extensive network of relationships with venture capital fund managers. We seek and engage in select fund relationships distinguished by aligned characteristics, including areas of investment interest, dealflowsharing, and co-led investment opportunities. Select universities, national laboratories and technology institutes are also a valuable source of potential dealflow.
Formed in 1993 and with more than 60 years’ experience, Dow Venture Capital has invested more than $530m in businesses in North America, Europe and Asia.
Gaule: What have been your most interesting recent deals to illustrate your approach?
Morris: Dow Venture Capital seeks opportunities in which Dow strategic interests and capabilities are well-aligned with start-up companies’ strategies, and collaboration between Dow and the start-up company can create superior value for all stakeholders.
We also look to invest in companies with breakthrough technologies which can help position Dow for future business growth.
Dow Venture Capital has made several investments that align strategically with Dow’s interests and create mutual value. Examples include investments in Clean Filtration Technologies (water treatment), NuvoSun (photovoltaics) and Blade Dynamics (wind energy). Another example is Dow’s investment in Xtreme Power, a company that provides utility-scale power management and large-scale energy storage systems.
Gaule: What is your current view on the VC market and the role of corporates in maintaining new start-ups?
Morris: Venture capital fund managers are findingraising new funds for early-stage investments a challenge and start-ups are also finding it difficult to attract capital. This creates an opportunity for corporate venturing.
In addition to providing funding, it may also be strategic for corporate venture capital to engage in a business or development relationship with the investee company.
This appears to be happening as corporate venturing investment levels have not declined as steeply during the last two years as total venture capital investments.
Trade sales will continue to be a far more likely exit route than an initial public offering and corporates continue to look for merger and acquisition opportunities to complement organic growth.
Gaule: What have you seen as the most challenging issues when managing interactions between your venture capital group and internal businesses?
Morris: It is important we have a clear understanding of the goals and strategies of the various Dow businesses, and they understand what role Dow Venture Capital can play to support their growth strategies.
Dow Venture Capital works closely with Dow’s performance and speciality businesses to understand business growth strategies and identify external investment opportunities which can enable growth.
Dow Venture Capital then collaborates closely with the Dow businesses to conduct due diligence, scope development, negotiation strategy and, ultimately, active engagement after any investment.
Gaule: What do you do to relax?
Morris: I love to ski and do a bit of ski teaching. Last year I took up telemarking, which is a new and enjoyable skiing challenge.
To contact Andrew Gaule and for future interview ideas email andrew.gaule@h-i.com and jmawson@globalcorporateventuring.com