Pictures of the Future – Venturing

Siemens supports young companies throughout all phases of their development—from initial idea to IPO and beyond.

Contrary to popular opinion, the demise of numerous companies in the New Economy does not mean that venture capital has dried up for promising start-ups. "As things have calmed down on the market, we can now take the time to even better analyze companies that interest us," says Björn Eske Christensen, CEO of Siemens Venture Capital GmbH (SVC). "We're also better equipped to help them achieve their objectives. Even in the past, we didn't pursue financial goals exclusively. Instead, we saw ourselves as a long-term partner of those companies we invested in. And since we took a relatively conservative approach to putting together our portfolio, we weren't as hard hit by the stock market crash and the bursting tech bubble as others were. So now's the best time for us to invest again."

Contrary to popular opinion, the demise of numerous companies in the New Economy does not mean that venture capital has dried up for promising start-ups. "As things have calmed down on the market, we can now take the time to even better analyze companies that interest us," says Björn Eske Christensen, CEO of Siemens Venture Capital GmbH (SVC). "We're also better equipped to help them achieve their objectives. Even in the past, we didn't pursue financial goals exclusively. Instead, we saw ourselves as a long-term partner of those companies we invested in. And since we took a relatively conservative approach to putting together our portfolio, we weren't as hard hit by the stock market crash and the bursting tech bubble as others were. So now's the best time for us to invest again."

SVC, which is headquartered in Munich, Germany and has offices in San José, CA, and Boston, MA, has invested 500 mill. € for Siemens over the last five years. The funds have been invested into more than 70 start-ups and 25 venture capital funds, most of them in the U.S., Europe and Israel. The Corporate Venture Organization focuses on young, innovative companies that operate in strategic technology fields in which Siemens is also active, such as information and communications, automation, medical engineering and energy. The companies targeted for investment also promise above-average returns. Fourteen companies in the SVC portfolio are now listed either on the NASDAQ or German Stock Exchanges.

Support for start-ups in the form of capital and know-how is generally divided into separate financing stages. Incubators and accelerators support firms during the seed phase—in other words, from the very beginning, when initial ideas are generated and patents are registered. SVC makes investments during subsequent financing rounds.

Siemens Technology Accelerator (STA), Munich, and Siemens Technology-To-Business Center (TTB) in Berkeley, CA, are both assigned to Siemens Corporate Technology (CT). STA focuses on turning technology that is not part of Siemens' core business into promising ventures by giving young companies professional advice and financing to help them get established or launched as spin-offs. TTB specializes in nurturing radical innovations for the core business areas of its sponsors, CT and the Automation and Drives Group. These innovative ideas primarily originate from academic research activities in the U.S. Siemens Business Accelerator in Munich provides advice and practical support for young companies, but does not make capital investments.

Siemens Mobile Acceleration GmbH (smac) is a wholly owned subsidiary of the Siemens Information and Communication Mobile Group. It specializes in supporting innovative business ideas in wireless communications. smac's services typically include support for start-ups around the world during the seed phase before market entry. smac provides extensive coaching and seed financing averaging approximately 1 mill. €. It currently maintains offices in Germany, France, the UK, Italy, Sweden and China.

"Basically we help to ensure that the companies we support are involved in technologies that correspond to Siemens in one way or another," says SVC's Christensen. "This is not only because we can better assess their chances of success; it also means we can offer them the opportunity to establish a partnership with our globally operating company—for developing new technologies or optimizing sales, for example." That's a very appealing offer—which is why most of SVC's start-up companies have business relations with Siemens.

Ulrich Eberl