BASF Venture Capital by liaoqinmei

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									BASF Venture Capital GmbH
The Corporate Venture Arm of BASF Group

Enterprising Knowledge
New Forms of Innovation Partnerships




Dr. Josef R. Wünsch
Managing Director: BASF Venture Capital GmbH
Berlin, June 2011
Corporate Venturers
How do they create value?


 Limited Life Expectancy (most dangerous activities) *
    Rock climbing w/o rope
    Sky diving
    Corporate Venturing ….


 A few have survived and prospered … many have not
 Value creation model appear to have been flawed




                                                          *P. Morris, EVCA 2008
                                                                              2
Venture Capital Basics



“Deal Flow”                                                     Cash-in returns

              Select & Invest

                                G ro w


                                   Bus                             Write-off
                                        ines
                                   as i       s
                                        nitia not as
                                             lly t h    goo
                                                    oug     d
                                                        ht…



                                                                                  3
Field of Operation
BASF’s Innovation Matrix

     Technology                   Plant Science

        New for    Exploratory    Future            Separate
         BASF      Research       Business          Legal Entities
                                  Venture Capital


                   Technology
     Established   Platforms       New Business
        at BASF                    Development
                   Marketing



                   BASF active    BASF NOT-active
                               Market
                                                                     4
Why does BASF foster Change …




FIX
          TRANSFORM
                           INNOVATE




                                       5
BASF Venture Capital
Strategic Objectives

 To develop
 strategic insights                            strategic
    emerging technologies                     insights
    key market trends
    novel business models
    business plans                             BASF
                                               Business
                                                - existing
                                               - emerging
                                                 - future
                                 technology                  business   To build strategic
                                   access                    options    business options
                                                                         joint project development
                                                                         joint market entry
            To access emerging                                           side-letter agreements with
                                                                          portfolio companies
            technologies
                                                                         option to acquire portfolio
             contacts to innovative service providers,                   company
              suppliers or customers
             joint technology development
             joint commercialisation                                                                   6
BASF Venture Capital GmbH
Key Objectives


      Window on Technology                        Risk-adequate Return
                                                      on Investment



  3 Areas of Strategic Support:
                                           Financial Performance Indicators:
Identify disruptive technologies for
 established technology platform of         Assess opportunities to achieve
 BASF Group                                  risk-adequate return on a single
                                             investment
Complement projects of BASF Future
 Business                                   A solid financial return requires
Leverage external skills in the area of
                                             diversification on technologies
 Growth Clusters                             and markets

                                                                                 7
Corporate Venture Capital
Strategic vs. Financial Objectives


 Strategic Objectives are Very Important to the Corporation but….
   without Financial Discipline around the Investment Mechanics, it is
    prone to become a Black Hole for Cash
   how Strategic can a Bad Financial Deal be?


The Corporate Venturer knows:
 Be Strategic when you look at Investment Opportunities
 But be Realistic when it comes down to Financial Risk



                                                                          8
   Key Parameters of BVC


 Founded April 1st, 2001
 Corporate Venture Capital firm of BASF Group
 Headquartered in Ludwigshafen
 14 Investment Professionals at present with offices in Lu, Fremont (USA), Hong Kong, Tokyo


 Vested with € 150 million
 Equity investments of € 1 million to € 5 million per investment
 23 direct investments at present




                                                                                               9
BASF Venture Capital
Mission Statement


           What we do:                      What we don’t do
    EUR 150 m Fund                  No seed stage investments
    EUR 1-5 m / company             Buy secondaries
    Stake 5-25%                     Finance suppliers/customers
    Co-investor                     Invest in public companies

    Board seats                     Finance projects

    Focus: Innovation in            Buy out
     chemistry, material science,    Do not invest in:
     biotech                            Pharmaceuticals
    Series A onwards                   Software/IT
    Cooperation's portfolio            Telecommunication
     companies
                                        Services
    Exits: IPO, trade sale
                                                                    10
BASF Venture Capital’s
Investment Process

                                                                                                       Over 4,000 deals since 2001



                                                                                                                                            €€



                                              Term Sheet
                                                                                                                       Managing
    First Contact        Screening                             Due Diligence                          Investment      Investments           Exit

~700 deals p.a.              ~15 %                                ~5 %                                   ~0,5 %
-   Deal sourcing      Short evaluation of:                   In-depth evaluation of:                    Contract       Managing and        Sale of
                                                Endorsement




                                                                                        Positive DD
-   VC Network         - Technology                           - Technology & IP                         Negotiation     controlling the     shares
-   BASF               - Business model                       - Business model                                           investment
-   Fund investments   - Market                               - Management                                                                  IPO,
-   Conferences        - Financials                           - Market attractiveness                                 Build relationships   Trade
-   VC Databases                                              - Investment partners                                   between BASF and      Sale
                                                              - Exit analysis                                          portfolio company




Technology                                                     Market &                                 BASF
                       Key Contact                                                                                    Board Seat
  Charter                                                     Tech Experts                            interaction
                                                                                                                                                      11
Heliatek GmbH
CVC Investment combined with
Corporate – Start-up Interaction




                                   12
Has BASF Venture Capital Created Value?



 Financial Return
   Within the targeted corridor
 Strategic Gains
   Often qualitative but well established
 Consultancy Role
   For internal senior management, NBD units, M&A, technology trends,
    Future Business etc.




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