Spinning off new companies from Siemens
Not all of the inventions that are conceived at Siemens can be directly turned into products at the company, despite the fact that many of these inventions are innovative and patented technologies that promise to be very successful on the market. In order to exploit these technologies’ potential value and the market opportunities associated with them, Siemens established Siemens Technology Accelerator GmbH (STA) in 2001 as a wholly owned subsidiary of Siemens Corporate Technology. This subsidiary’s mission is to detect and market potentially profitable innovations.
Very often, the best way to engage in marketing is to create a spin-off company. During the first phase of a new spin-off’s existence, STA supports the founders in every way – legally, financially, organizationally, and in terms of its collaboration with investors. Everybody profits from this assistance. On the one hand, partners and investors gain access to innovative technologies and Siemens’ global network. On the other, the founders receive professional assistance and Siemens earns money from the implementation of developments that originated at the company, even if the final products are not related to its core business.
The establishment of EnOcean, the current world market leader for cable-free and batteryfree radio sensor solutions, was ultimately the result of a completely new idea. Developers at Siemens Corporate Technology had invented and patented radio sensors that do not require external energy sources. The sensors obtain their operating current from the energy expended when a switch is pressed or from small differences in temperature, for example. Together with STA, a team analyzed which areas offered the best market opportunities. After determining that the new technology was superior to conventional products for lighting and status switches in building installation technology applications, the STA team looked for pilot customers and drew up a business plan.
In addition to the five Siemens employees who switched to the spin-off company EnOcean as its founders, STA recruited other experts and helped the spin-off to conclude its first financing round by providing venture capital. The latter can be a particularly grueling challenge for new companies, since they need significant amounts of capital but are not yet generating any sales. STA quickly managed to find well-established venture capital providers for EnOcean’s business idea. That allowed the company, which is based in Oberhaching near Munich, Germany, to expand rapidly. During this process, EnOcean benefited greatly from Siemens’ diverse business relationships. The new company rapidly became known worldwide thanks to various showcase projects, such as the 236-meter-high Torre Espacio office building in Madrid, Spain, which was fully equipped with EnOcean’s cable-free radio sensor technology.
Marketing of spin-off companies
The search for the right location for the spinoff depends on many different factors. Another STA spin-off is Pyreos, which is based in Edinburgh, Scotland. In 2007 STA set up Pyreos as a company that develops and produces innovative infrared sensors for use in motion detectors and cameras, for example. To meet its production requirements, Pyreos had to be located close to specialized semiconductor technology suppliers. With this in mind, STA selected a location in Scotland that offered the ideal mix of technological conditions for the spin-off’s operations. It also found outstanding experts for Pyreos’ management team, as well as venture capital investors who specialized in the local market.
After STA has concluded a spin-off company’s initial foundation phase, venture capital investors increasingly take over the task of financing the new firm. These financers can include Siemens Venture Capital, which is also a wholly owned subsidiary of Siemens. However, STA, and thus Siemens, always keeps a minority holding in such spin-offs until they are either ready for their IPO or are acquired by another company. Both of these events mark the end of a successful foundation and build-up phase.
Another way to market Siemens technologies externally is to sell them. This is especially the case with regard to innovations that require an existing manufacturing organization or a well-established sales network for their market success. One example of this is the piezo drives developed by Corporate Technology. These drives are small, innovative motors that are extremely well-suited for highly dynamic, precise, and powerful mechanical control tasks. Such drives require not only special know-how in piezo technology but also sales channels to a large number of industries that employ these small motors. The STA team therefore looked for a purchaser who met these conditions and also fulfilled the requirements of Siemens businesses that have a great interest in buying and using the piezo drives as components in their systems. The team ultimately succeeded in selling the piezo drive technology to Noliac, a Danish firm that is a renowned specialist for piezo components. Siemens benefits from this sale in two ways. In addition to earning money from the technology’s sale, it has also created a supplier for innovative piezo drives that would otherwise be unavailable on the market.
More information can be found at www.siemens.com/sta