Bosch sees VC as an agent of change

ZURICH — EE Times approached Markus Thill and Claus Schmidt, managing directors at Robert Bosch Venture Capital GmbH (RBVC), to learn more about its areas of investment and progress to date.

Launched in late 2007 with a capital commitment of some €200 million (about $300 million), RBVC has the goal of supporting innovation across its parent’s corporate business units, as well as of contributing to corporate strategies.

It is also responsible for making capital commitments to other venture capital funds whose focus or area of specialization complement its own. For example, it recently invested in a fund managed by Cleantech specialist Emerald Technology Ventures (Zurich, Switzerland).

The two Bosch executives are still building the venture team, a process that they say will take another year or so. When complete it will be a team that combines industry know-how with venture capital experience, the executives said.

The plan is to recruit “roughly half” from inside Bosch, which is one of the foremost European engineering hot houses, and the other half from the ranks of the venture capital world.

RBVC will need a team with that kind of experience mix because it is intended to be self-supporting and generate enough returns to sustain its activity.

While the venture unit is modeled as “closely as possible on the business model and systems established by independent venture funds”, it has to “actively support” portfolio firms to achieve success, which is where the electronics industry insiders are needed.

The team also has to figure out how investments can contribute to the adoption of innovation in the Bosch product portfolio, and at the same time act as eyes and ears for Bosch as its looks for innovative technologies and business models emerging from startups.

The combination of venture capital experience and industry connections will also be important for its fourth task, supporting newly-incubated businesses that emerge from the parent company’s large portfolio of business units.

The task is to follow the parent company’s business areas while being complementary and not directly overlapping Bosch’s product R&D. RBVC won’t invest in technologies or business models that are already being developed internally.

Thill and Schmidt said they are optimistic about the benefits for Bosch and the value-add RBVC can bring to startups.

Reception from both within Bosch and outside in the wider venture capital community has been warm, they report. One reason for that is that the private company has a reputation for long-term strategic decision-making, they suggest.

The emerging corporate venture team can point to some encouraging early results.

Despite having yet to make its first direct investment, RBVC has already brokered meetings between startups and Bosch divisions; relationships that “might not have been established” without its involvement.

As for RBVC’s role as limited partners in venture funds, the Bosch executives want RBVC to look globally for VC funds to invest in. But since its aim is to create what it describes as a close relationship with each fund, there will be pressure on the RBVC’s time and effort. Thill and Schmidt said they are looking at a “very limited” number of venture funds.

This story appeared in the EE Times Europe print edition covering July 7 - August 24, 2008. European residents who wish to receive regular copies of EE Times Europe, subscribe here.

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