Ohio Venture - OVA Review Newsletter
News from the Great Lakes Venture Fair on October 17-18, 2012
at Cleveland Marriott Downtown

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As returns from traditional venture capital have lagged over the last decade, and as large corporations—many buoyed by large pools of retained earnings—have begun realizing that not all potential innovations are to be found within their own walls, the interest in corporate venturing has exploded.

That subject was thoroughly explored at the recent Great Lakes Venture fair, including by the keynote speaker, Procter & Gamble's Vice President of Global Business Development, Jeff Weedman.

There's little mystery about why P&G is interested in corporate venturing. Half of its innovation initiatives are now supported by such external partnerships, said Weedman, and they have shown a 70 percent higher return, on average. The company's popular Febreze brand air freshener, now celebrating its tenth anniversary, "would not be here today without 'Connect and Develop,' " he noted, referring to the company's open innovation program.

There are basically three types of corporate venturing, he explained—financial, strategic and start-up. In his 15 years in the corporate venture arena, he's tried all three. "But I've come to believe my best role is as a strategic partner." Still, such initiatives will always be filtered through a single lens: "do you have a unique way to get to our product segment?"

He said that P&G also likes to co-invest with purely financial investors. But again, not until two important questions are answered. Does this venture address a core strategic initiative, and is there an internal champion?

Weedman, a 35-year veteran of the company, explained that P&G is faster than some on moving on strategic investment, but that the company can also be deliberative. "People will say, 'Jeff, why don't you buy this company?' But we like to hang out first." In the end, he concluded, "we've been around for 175 years, and while we're not as slow-moving as academia, we also want to be around for another 175 years."

Later panels took up the subject of how best to "dance with the 800-pound gorilla," as Phil Brennan, CEO of Echogen Power Systems, put it.

SujathaRamanujan, Vice President of Intrinsiq Materials, who has also worked in corporate venturing, warned: "don't put all your eggs in one corporate (partner's) basket, because people move around." She also suggested that early stage companies seek meaningful validation from potential corporate partners, for instance by asking for a plan on how the company would integrate the product or service through its supply chain. "That way, I don't just go back to my funders with ink, but with a joint development plan."

Jason Rottenberg, general partner of Arsenal Venture Partners, noted that it helps to find a corporate partner that's actually done such a deal before. "Because if you have to teach them how to do it, either as an entrepreneur or a co-investor, it's going to be an uphill battle."

And remember, counseled Draper Triangle Venture's Mike Stubler, "your interests are not always aligned with corporate partners—who are going to be most focused on the interests of their own company—as you are with a purely financial investor."

More information:

OVA's New Video Archive is Online:

OVA is pleased to have recently added an archive of program videos to its website. You'll find the full video record of most OVA formal programs since 2008 at www.ohioventure.org/video-archive.html.

Upcoming Meeting Dates:

  • November 2, 2012
    Dave Johnson
    Public Relations, Cleveland Medical Mart and Convention Center (MMCC)

See complete details and registration for these events.
 

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Newsletter Sponsors:

The Oho Capital Fund

Taft Stettinius & Hollister

Glengary LLC

Chrysalis Ventures

Early Stage Partners

Edison Ventures

Draper Triangle Ventures

Fir Hill, LLC

Ciuni & Panichi

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