With overlapping crises in the past year — from a global pandemic to natural disasters — corporate venture capitalists have had to tweak their strategies.
According to Carl Stjernfeldt, venture and strategic investing at Shell seeks to lead the company’s energy transition toward a clean energy value chain, and support Shell’s carbon reduction goals. Stjernfeldt is Head of Corporate Development for Shell Renewables and Energy Solutions, Americas.
“The corporate venture unit is doing equity investments at $3 to $5 million initially, $5 to $15 [million] over the lifespan [of the investment]. [We’re] very comfortable to lead rounds or participate in rounds, take board seats, be observers, or neither — depending on what the situation requires,” Stjernfeldt said. He also noted that as part of Corporate Development, his team can also make larger investments up to in the hundreds of millions. However, the group ”only make[s] investments where it’s strategically important to Shell.”
AXA Venture Partners, part of the Paris-based insurance company AXA, operates two primary funds focused on growth- and seed-stage companies. These investments range from $1 to $20 million dollars, and mostly involve Series B startups and onward.
“Updating our value chain is an important area,” said Bastiaan de Goei of AXA Next Americas. ”Health is…another area to innovate in. And lastly, commercial lines…and business interruption,”
Stjernfeldt and de Goei explored shifts in their investment strategy — including best practices for socially-distant investing — at Venture Café’s recent Corporate Innovation Connect event. Three takeaways follow.
Top Priorities in 2021
Prior to the pandemic, de Goei said his team was looking for opportunities in health services — a focus area that became even more pressing when COVID-19 began to spread. That included companies that help people to manage their own health and wellness, creating better outcomes for patients and insurers.
Of Shell’s Renewables and Energy Solutions, Stjernfeldt says the team has shifted its focus gradually. “Ten years ago, [the company] was more focused on: How can we make the hydrocarbon part of the business more efficient? … Now, there is significantly more focus on the entire renewable ecosystem.”
Another focus for Shell, Stjernfeldt notes, is mobility — including ride-sharing and community mobility solutions.
“We have, for example, [a collaboration with] a partner company called Via Transportation…which basically is a pop-up transit service provider… There’s little vans driving around picking people up,” he explained. According to Stjernfeldt, Via is looking to electrify its fleets, which can have a benefit to Shell. “When you run out of charge, you’re close to a Shell retail station.”
Prior to the pandemic, scouting for potential investments often involved traveling to industry conferences and meetings to vet for potential matches. In the COVID-era, large parts of the pipeline have gone digital at venture funds.
At AXA Next Americas, de Goei said, the team benefitted from an already-established online presence, including its Twitter account, and hosting virtual meetups. “[We] have been able to capitalize on the network we built over the past five years…which basically has meant that deal flow has been very, very sustainable,” he said.
De Goei also commented that Zoom and Microsoft Teams allow investors to pack more meetings into a day.
However, online meetings can be challenging. Stjernfeldt comments that gauging an entrepreneur’s character is more difficult without spending time face-to-face. “It is so much easier to understand who a person is when they sit in front of you,” he said. “It’s such an important piece of these teams — to make sure that you bet on the right group of people.”
Further, Stjernfeldt said, startups often have to work with investors to iterate upon their ideas. These whiteboarding and working sessions are harder to facilitate over Zoom.
“If you are in the same geographic location in warmer weather, go for an outside walk. Do something that is socially-distant and acceptable. Even that gives a big value-add, versus just having a Zoom call,” Stjernfeldt recommended.
Building a Healthy Partnership
Watch the video above to hear de Goei and Stjernfeldt discuss best practices for building healthy partnerships in corporate venture.
de Goei reminded startup founders that corporate venture groups, typically have set objectives that they seek to meet through investing. Due diligence should be a two-way street, with startups researching different corporate funds’ goals.
“We have funds in order to enhance our insurance operations,” de Goei says. “For startups to position themselves, it is actually really important to think about the corporate. What is their motivation? Where are they coming from?”
From a corporate perspective, Stjernfeldt reminded venture groups to keep the startup’s limited resources in mind. A small player, he said, may not have a dedicated compliance officer to review a lengthy legal document or adjust to the established processes of a large organization.
“I usually [call it] the ’bear hug of death’ because it’s a very nice, warm, fuzzy embrace,” Stjernfeldt explains. “We will kind of squeeze the startup. [And] they spend all the resources trying to satisfy our process-related items, without actually working on the business problem, or the technology solution behind [their offering].”
Corporate venture capitalists, Stjernfeldt recommends, should help their parent organization better understand the startup’s needs to avoid overwhelming the smaller player.