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Dr. Josef R. Wünsch
Managing Director: BASF Venture Capital GmbH
Berlin, June 2011
BASF Venture Capital GmbH
The Corporate Venture Arm of BASF Group
Enterprising KnowledgeNew Forms of Innovation Partnerships
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Corporate VenturersHow 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
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Venture Capital Basics
“Deal Flow”
Select & Invest
Grow
Business not as good
as initially thought…
Cash-in returns
Write-off
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Field of OperationBASF’s Innovation Matrix
ExploratoryResearch
New BusinessDevelopment
Plant Science
FutureBusiness
Venture Capital
TechnologyPlatforms
Marketing
BASF active BASF NOT-active
New forBASF
Establishedat BASF
Technology
Market
SeparateLegal Entities
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Why does BASF foster Change …
FIX
TRANSFORM
INNOVATE
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To developstrategic insights
To build strategicbusiness options
emerging technologies
key market trends
novel business models
business plans
joint project development
joint market entry
side-letter agreements withportfolio companies
option to acquire portfoliocompany
BASFBusiness
- existing- emerging
- future
strategicinsights
businessoptions
technologyaccess
To access emergingtechnologies
contacts to innovative service providers,suppliers or customers
joint technology development
joint commercialisation
BASF Venture CapitalStrategic Objectives
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3 Areas of Strategic Support:
Identify disruptive technologies forestablished technology platform ofBASF Group
Complement projects of BASF FutureBusiness
Leverage external skills in the area ofGrowth Clusters
Financial Performance Indicators:
Assess opportunities to achieverisk-adequate return on a singleinvestment
A solid financial return requiresdiversification on technologiesand markets
Window on Technology
BASF Venture Capital GmbHKey Objectives
Risk-adequate Return
on Investment
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Corporate Venture CapitalStrategic 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
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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
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BASF Venture CapitalMission Statement
What we do:
EUR 150 m Fund
EUR 1-5 m / company
Stake 5-25%
Co-investor
Board seats
Focus: Innovation inchemistry, material science,biotech
Series A onwards
Cooperation's portfoliocompanies
Exits: IPO, trade sale
What we don’t do
No seed stage investments
Buy secondaries
Finance suppliers/customers
Invest in public companies
Finance projects
Buy out
Do not invest in:
Pharmaceuticals
Software/IT
Telecommunication
Services
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BASF Venture Capital’sInvestment Process
~700 deals p.a.- Deal sourcing- VC Network- BASF- Fund investments- Conferences- VC Databases
Screening
~15 %Short evaluation of:- Technology- Business model- Market- Financials
Due Diligence
~5 %In-depth evaluation of:- Technology & IP- Business model- Management- Market attractiveness- Investment partners- Exit analysis
Investment
~0,5 %Contract
Negotiation
ManagingInvestments
Managing andcontrolling the
investment
Build relationshipsbetween BASF andportfolio company
En
do
rsem
en
t
€€
Exit
Sale ofshares
IPO,TradeSale
First Contact
Po
sit
ive
DD
TechnologyCharter
Key ContactMarket &
Tech ExpertsBASF
interactionBoard Seat
Term Sheet
Over 4,000 deals since 2001
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Heliatek GmbHCVC Investment combined withCorporate – Start-up Interaction
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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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