Aquamarine flap 800 kW
Dr. Kurt Kaltenegger, CTO ATV,
Ecosummit Berlin 2012
ABB Technology Ventures
The Art of Corporate Venturing
www.abb.com/ventures
© ABB Group - Introduction to ABB Technology Venture
March, 2012 | Slide 1
How ABB is organized
Five global divisions
Power
Products
Power
Systems
Discrete
Automation
and Motion
Low Voltage
Products
Process
Automation
$10.3 billion
35,000
employees
$7.7 billion
19,500
employees
$8.4 billion
27,500
employees
$5.0 billion
21,000
employees
$7.8 billion
28,500
employees
(2011 revenues, consolidated)
§
ABB’s portfolio covers:
Electricals, automation, controls and
instrumentation for power generation
and industrial processes
§
Motors and drives
§
Intelligent building systems
§
Power transmission
§
Robots and robot systems
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Distribution solutions
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Low-voltage products
Services to improve customers
productivity and reliability
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© ABB Group
April 13, 2012 | Slide 2
ATV ABB Technology Ventures
§
Investing in early stage companies with
Technologies of strategic interest to ABB
Girish Nadkarni
§
Small team with global business and technology
due diligence support from ABB
Kurt Kaltenegger
§
Active R&D, commercial and operational
support to portfolio companies
Andrew Tang
Managing Director
Head of ABB Technology Ventures
Head of Technology
Managing Director
Grant Allen
Vice President
§
Typical deal criteria:
§
$1-$25 million USD with reserves for follow-on
§
4-6 deals / approx. $70 million per year
§
Geography and stage agnostic
§
Often partner with leading VCs, e.g. DFJ, VantagePoint,
Investor Growth Capital, Mission Point
v  Renewable Energy
v  Smart grid
v  Energy Storage
§
Investment must meet traditional VC financial return
requirements and have “credible” strategic value to ABB
v  Energy Efficiency
v  Discrete Manufacturing
§
Linkages with ABB business units and R&D/technical
resources to ensure additional investment value-add
© ABB Group - Introduction to ABB Technology Venture
March, 2012 | Slide 3
Strategic themes
v  Intelligent Sensing
v  Water Technologies
v  Waste to Energy
CleanTech Award 2010
San Francisco 2011
The sustainable Art of Corporate Venturing
In the past ………. traditional VCs: financing & building companies (Intel, Compaq and Apple)"
"
Ø  SW companies in the 1980s, dotcoms in the 1990s changed everything!
"concept à revenue à exit (even not fully functioning business): very short time, with little capital
è gigantic returns
VC portfolio is dynamic: from 10 portfolio companies, 3 failed, 3-4 did OK and 3-4 had superior returns
Now, VCs looking for the one company with a 100x return:
•  Starving all others of funding and attention and
•  Pre-money valuations went through the roof!
We need a different approach!! ….. how CVC & VC co-invest in Cleantech!
In Cleantech:
•
•
•
•
•
•
•
long and complex gestation period
significant larger capital requirements (e.g. proof of concept to scaling, cost BrightSource $150MM)
no 10x returns in Cleantech
not in driving distance, not within geographical sphere
no former portfolio companies to buy your current investment
public markets too volatile and unreliable for exit
20-30 year warranties to be given
There is an urban myths (capital intensive, too long etc.) ……………. (Bart Markus, Wellington Partners)
but „utility and commercial size Technologies” are often as said.
© ABB Group - Introduction to ABB Technology Venture
March, 2012 | Slide 4
The sustainable Art of Corporate Venturing
Sustainable cooperation (co-investment) and symbiosis model for VCs and strategic investors
LPs (funding VC firms) to adjust expectations
Strategics (like ABB or companies as critical part of the supply chain) add value through support on:
i.
Technology
ii.
Product development
iii.
Sourcing and building a supply chain
iv.
Commercialization
v.
Credible Exit
ATV: Business people on board when ever possible
Success factors (what we are doing different): strong link to business to support portfolio company
How to manage terms:
•  Put/call arrangement between strategics and the VCs guaranteeing the VCs a return
of 3-4X if the company hits certain pre-agreed milestones
•  Strategics not to be forced to pay significant premium for value brought in
•  VCs from targeting 10X returns for 2 of their portfolio companies, to targeting 3x for 3-4 of their portfolio
companies
•  To be aware of certain risks
Model to be discussed further ……….
© ABB Group - Introduction to ABB Technology Venture
March, 2012 | Slide 5
© ABB Group 091111091023-ATV
Introduction
Investment
to ABB
Strategy
Technology
& PolicyVentures
November
April
13, 2012
1, 2011
| Slide
| Slide
6 6
Scenario mapping as the key input
Profitable Growth Opportunities
… Technology Ventures
Grow existing business
short term
Develop new business
mid term
long term
Growth Strategy
(market, portfolio, …)
Technology & Market
Trends
Expected
Game Changer
Interesting Growth
areas in proximity to
today’s business
New enabling
Technologies
Topics to search
Filter criteria
•  Mgmt team
•  IP
•  Stage
•  Costs
•  Exit
•  etc.
KPI: BUs NPV
visualization of vision
Market Development
Scenarios
Why do we need a corporate venture capital group?
Emerging Technologies
Emerging Competitors
Smart Grid
Cyber Security
Renewables
Thousands of Start-Ups
Teaching ABB businesses to be paranoid!!!
© ABB Group - Introduction to ABB Technology Ventures
January 12, 2012 | Slide 8
Where Should a Corporate Venture Capital Group Play?
High
Proximity to core
technology
Level of technology
innovation or potential
disruption
Low
Low
High
$0
Proximity to
current market
Low
> $500 MM
Potential Market Size
CVC should push technology & market boundaries with
potential for large payoffs
© ABB Group - Introduction to ABB Technology Ventures
January 12, 2012 | Slide 9
Achievements to Date
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Created active global deal pipeline
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Acquired status of preferred investor
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Evaluated over 1,000 potential investments
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Identified and educated businesses on numerous emerging technologies, business
models and market segments
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Invested ~$100 MM in 8 companies, including 4 refinancings
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Invested in 2 cleantech venture capital funds
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Facilitated preferred supplier and marketing agreements with portfolio companies
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Appointed various business people on Boards of portfolio companies
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Identified numerous acquisition targets including Ventyx and Powercorp
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Spoke at over 50 industry and VC conferences
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Awarded Cleantech Company of the Year in 2010 for investment activity
§
Initiated and led numerous industry segment studies to identify emerging trends and
potential investment targets
§
Speaking partner for business and technology strategy for BU’s and ISI’s
© ABB Group - Introduction to ABB Technology Ventures
January 12, 2012 | Slide 10