Venture Capital Funding
Venture Capital Funding and strategic partnering Hanna Lucas - Hellman Millbrook, September 2013
• Castrol innoVentures: what we do • Venture Capital Funding • Challenges for start ups in automotive • Positioning for success
Creating Value Beyond Lubricants Aiming to build material new businesses for Castrol Beyond Lubricants Castrol Today Performance & Engine • >$1.3Bn EBITDA • ~7,000 people globally
Threats Changing Mobility, Energy & Manufacturing………….
Castrol Tomorrow Performance & Mobility & Efficiency?
Opportunity ………….to leverage our capabilities, brand, relationships, geographies…
BEYOND LUBRICANTS
innoVentures Corporate Venturing Our focus areas Next Generation Engineering
Intelligent Operations
Responsible Castrol
Smart Mobility
Castrol innoVentures: Approach Internal Development
An open and flexible approach to investment and partnerships: • • • •
Venture Investments Acquisitions Joint Ventures to jointly develop & commercialise Commercial partnerships, e.g. off take, licensing, channel partner
Customers & Suppliers
Venturing & investment
Partnering M&A
New Business
What is Venture Capital investment? • A type of private equity capital • Cash in exchange of equity shares • Early stage, high growth companies • Return through IPO or trade sale • Co-investment is common • Often for minority stakes
innoVentures embraces proven venturing strategies Corporate Venturing a growing source of innovation
Capability Venturing
Foundation Venturing
Ideally each party brings value to the table
The Entrepreneur ■ Unique innovation and thinking
■ A dynamic and
entrepreneurial spirit
■ Deep and focused technical skills
The Co-investor ■ Capital for growth ■ Deep venture capital experience
■ Deep financial expertise
■ Capital for growth ■ World-class technical and engineering expertise ■ Access to customers globally ■ Global partnerships and networks, Brand strength
Benefits & Challenges The Entrepreneur Benefits
•
Accelerate growth: access to capital, networks and expertise
• •
Possible exit Development partner in the application for grant income
Challenges
•
Fundraising is very time consuming
•
Finding the right shareholders to grow
The Corporate Benefits
•
Access to new technologies, insights
•
Potential returns
Challenges
• • •
Extract value Follow on investments Uncertainty of ROI
Challenge for start ups in the Automotive sector >2-5bn
•
Challenging ROIs: long time to market, scalability uncertain
•
Capital investment significant
•
Industry dynamics: OEM dependence, profitability uncertain
Approximate cost of scaling up a process technology (e.g. Biofuels)
Challenge to access funds in Europe Europe is a challenging Venture finance environment
Success and Failure examples Success case: Waze • Great exit: was acquired by Google for $1.3 billion • Scalable model: a social mobile app enabling drivers to contribute to and use real-time road intelligence • Significant return for investors: including KPCB, Horizon Ventures, BlueRun Ventures, Qualcomm Ventures had invested $70 million.
Casualties: Better Place • Bankrupt before exit: An Israeli group is looking at buying the assets of bankrupt Better Place. • All investment lost: Better Place raised about $850 million from investors including Israel Corp, General Electric, HSBC Holdings, the European Investment Bank, Morgan Stanley.
Positioning for success Typical Investment criteria •
Quality of the management team
•
Real and demonstrated differentiation, preferably protectable
•
Proof of value to customers
•
Materiality: scalable and profitable business model
•
Realistic growth forecast and further capital investment required
•
Attractive when at least 3xROI in in 5-7 years, generating an IRR >25%
•
Potential added value as a (strategic) partner / investor
Wrap up
• Don’t be afraid of venture finance • But find the right partner investors to grow your business • Strategic investors bring value at the right time • Mould your business model for profitability & ROI
Hanna Lucas – Hellman [email protected]
• Castrol innoVentures: what we do • Venture Capital Funding • Challenges for start ups in automotive • Positioning for success
Creating Value Beyond Lubricants Aiming to build material new businesses for Castrol Beyond Lubricants Castrol Today Performance & Engine • >$1.3Bn EBITDA • ~7,000 people globally
Threats Changing Mobility, Energy & Manufacturing………….
Castrol Tomorrow Performance & Mobility & Efficiency?
Opportunity ………….to leverage our capabilities, brand, relationships, geographies…
BEYOND LUBRICANTS
innoVentures Corporate Venturing Our focus areas Next Generation Engineering
Intelligent Operations
Responsible Castrol
Smart Mobility
Castrol innoVentures: Approach Internal Development
An open and flexible approach to investment and partnerships: • • • •
Venture Investments Acquisitions Joint Ventures to jointly develop & commercialise Commercial partnerships, e.g. off take, licensing, channel partner
Customers & Suppliers
Venturing & investment
Partnering M&A
New Business
What is Venture Capital investment? • A type of private equity capital • Cash in exchange of equity shares • Early stage, high growth companies • Return through IPO or trade sale • Co-investment is common • Often for minority stakes
innoVentures embraces proven venturing strategies Corporate Venturing a growing source of innovation
Capability Venturing
Foundation Venturing
Ideally each party brings value to the table
The Entrepreneur ■ Unique innovation and thinking
■ A dynamic and
entrepreneurial spirit
■ Deep and focused technical skills
The Co-investor ■ Capital for growth ■ Deep venture capital experience
■ Deep financial expertise
■ Capital for growth ■ World-class technical and engineering expertise ■ Access to customers globally ■ Global partnerships and networks, Brand strength
Benefits & Challenges The Entrepreneur Benefits
•
Accelerate growth: access to capital, networks and expertise
• •
Possible exit Development partner in the application for grant income
Challenges
•
Fundraising is very time consuming
•
Finding the right shareholders to grow
The Corporate Benefits
•
Access to new technologies, insights
•
Potential returns
Challenges
• • •
Extract value Follow on investments Uncertainty of ROI
Challenge for start ups in the Automotive sector >2-5bn
•
Challenging ROIs: long time to market, scalability uncertain
•
Capital investment significant
•
Industry dynamics: OEM dependence, profitability uncertain
Approximate cost of scaling up a process technology (e.g. Biofuels)
Challenge to access funds in Europe Europe is a challenging Venture finance environment
Success and Failure examples Success case: Waze • Great exit: was acquired by Google for $1.3 billion • Scalable model: a social mobile app enabling drivers to contribute to and use real-time road intelligence • Significant return for investors: including KPCB, Horizon Ventures, BlueRun Ventures, Qualcomm Ventures had invested $70 million.
Casualties: Better Place • Bankrupt before exit: An Israeli group is looking at buying the assets of bankrupt Better Place. • All investment lost: Better Place raised about $850 million from investors including Israel Corp, General Electric, HSBC Holdings, the European Investment Bank, Morgan Stanley.
Positioning for success Typical Investment criteria •
Quality of the management team
•
Real and demonstrated differentiation, preferably protectable
•
Proof of value to customers
•
Materiality: scalable and profitable business model
•
Realistic growth forecast and further capital investment required
•
Attractive when at least 3xROI in in 5-7 years, generating an IRR >25%
•
Potential added value as a (strategic) partner / investor
Wrap up
• Don’t be afraid of venture finance • But find the right partner investors to grow your business • Strategic investors bring value at the right time • Mould your business model for profitability & ROI
Hanna Lucas – Hellman [email protected]
