While many corporate venture funds may appear to generate middling returns, often they can generate huge internal value within an organisation. The key is to determine what you want to achieve with a venture fund, and then take the time to thoroughly set and communicate the strategy with your people. If you provide crystal clarity on value generation for the company, then your carefully chosen team will be able to accelerate the execution.
In a recent episode of my podcast, the World Class Leaders Show, I was pleased to host Dr. Andreas Berger. Dr. Berger is presently the managing director of the Wintershall DEA Technology Ventures corporate fund. Wintershall DEA is a German gas and oil producer, created in 2019 by a merger between Wintershall Holding GmBH, and DEA Deutsche Erdoel AG. As a classic high achiever, Andreas has been a lawyer and entrepreneur, an in-demand keynote speaker and philosopher. He owns an investment company and has extensive business experience in Mergers and Acquisitions.
Beginning approximately ten years ago with the tide of venture capital becoming concentrated in digital start-ups, the concept of corporate venture capital began gaining momentum and increased interest. “Traditional” organizations who want to invest in core production efficiency, innovation, increased sustainability, and similar projects are discovering this option. The creation of a Corporate Venture Fund can provide additional value to an organisation, since its existence can be a catalyst for internal development of new products and solutions which may serve other industries.
Key Factors for Success
If the organization is not publicly traded, there are four key factors to address:
- The company owner must be supportive of the idea
- Management of the organisation must be well aligned behind the strategy
- Focus is critical: what do you want to do with the funds?
- Do you have the right team members in place?
Selecting the Right Team
It can be quite challenging to source the right leader for the venture fund, since it’s best to identify an individual who can embrace both start-up and corporate risk profiles at the same time.
A good team will be constructed from both internal and external organisation members. An excellent managing director from the outside world should be teamed with someone who is great internally; someone who understands the internal processes, and who knows the people.
Silicon Valley vs European Entrepreneurialism
One of the most interesting topics during the podcast episode came when Dr. Berger discussed his experience in working in Silicon Valley, and the differences he has noted between entrepreneurial approaches compared to Europe. In Europe, the generally accepted model for product development is to program for a period of time, let’s say six months; release the product, then try to find out what customers think. There’s a real reluctance to release a product that is not 100% ready.
Whereas, in the Valley, there is an extremely strong emphasis on external customer feedback at very early and incomplete stages of development — sometimes even working just from “sticky notes”. This provides a very fast response on critical User Interface (UI) questions, which allows the developers to accelerate product acceptance on release. So, the user-centricity offers a much faster cycle. The most important lesson is to acknowledge that you, the developer or the manager of the company building the product, are NOT the customer. The customer is the person who is going to use the product every day, many times a day.
While the nature of a venture fund tends to stay on the leading edge of technology, Dr. Berger shared with us that Wintershall DEA’s fund is careful to concentrate on their core business mandate. There are units which may emphasize innovation activities in order to see what’s over the horizon, but the clear definition of the business strategy provides the primary focus.
How is it possible to foster an entrepreneurial mindset and an innovation culture?
The simple answer is that it comes down to leadership; being a role model, and being an enabler. Innovation exists in many places in organisations, including embedded within the operations. It needs to be acknowledged, fostered, and above all, modeled and enabled. Innovation does not need to be ‘disruptive’ in order to be effective — success stems from problem solving and finding solutions to day-to-day issues.
Then, the team must be given enough support and autonomy to build their ecosystem in its own right.
Dr. Berger’s answers to my “Top Guest Questions”:
What is the number one thing that you really learned in your career?
Honestly, it’s following the learning. Throughout my entire career, whenever I faced an offer or a proposal, my number one criteria was, “What will I learn by doing this”?
My biggest business advice for anyone is to follow the learning, and you will become so much better at what you can do.
What is one thing you would perhaps have done differently in your career?
I don’t regret finishing my law degree, although I could have also imagined not finishing college and becoming a real entrepreneur and going all-in on a start-up. I did actually think about dropping out multiple times. But I don’t regret not doing it — it would have just been a different path.
When you had your best professional performance, what conditions were in place?
I can tell you that 100% it was leadership. During my M&A deals, I always told the CEO that if he could keep the corporate red tape away from me, I would succeed. And that’s what he did. He shielded me and enabled me, and the deals were done very successfully.
What is one book that really made an impact on your life, your career, or your profession?
It’s a book by a German author, Daniel Kahneman. The English title is “Thinking Fast and Slow”. I think that anyone who needs to lead a team, raise children, or run a school should read this book. You will learn a lot about yourself.
To contact Dr. Andreas Berger, you can go to his LinkedIn profile: https://www.linkedin.com/in/draberger/
Or, visit the corporate website at: https://wintershalldea.com/en
Listen to the podcast linked to this article: https://www.andreapetrone.com/how-to-drive-innovation-through-corporate-venture-funds-podcast/