5 questions with Luis Avila-Marco

Luis Avila-Marco is the senior vice president of strategy and corporate development for Juniper Networks and is tasked with executing the company’s recent foray into the venture capital business. Less than a month ago, the networking giant announced a $50 million initiative to finance startups building products and services using its Junos operating system for routers and switches. PE Week Senior Writer Alexander Haislip caught up with Avila-Marco to learn just how the corporate venture firm was going to work.

Q: How many investments do you plan to make?A: It depends on the opportunities that come to us. I imagine we will invest in 10 to 20 companies initially. We will be a syndicate partner. Stage will not be something too critical to us. Most likely we will participate from early to mid-stage rounds, but it is unlikely we will lead the valuation. Nothing is off the table at this stage.

Q: What’s the value to a startup of working with your fund instead of a non-corporate venture capitalist?A: Once a company is part of the Juniper ecosystem, we may be able to help them to reach customers using our sales force. We have a large install base of products and can help a startup get its product out to our customer base. We bring the opportunity to be partners in distribution. It allows entrepreneurs and investors to focus on the things that matter most for creating value. You don’t have to invest a significant amount of money rebuilding things that are already built. Instead, you can just build your differentiation on top of this platform.

Q: A lot of corporate venture operations disappear as soon as their corporate parent misses earning expectations. What happens if Juniper has a down quarter?A: From an earnings standpoint, there’s a nice disconnection of the VC fund and the earnings of the company. The only relation is if there’s a write-down from the portfolio. Hopefully there will not be any of those. If Juniper earnings come down, there should be no connection. We didn’t cut R&D during the downturn either, which should be a proof point.

Q: Corporate venture arms have traditionally had trouble keeping good talent, thanks to a compensation structure that doesn’t mirror what independent venture firms can offer. How have you set up the incentives for your staff?A: We don’t disclose the way we compensate our executives in this area. It is aligned with the overall compensation of the company. There is no kind of venture capital compensation structure. We believe the company is able to attract great talent in this area based on the compensation we have. There are people who go to work for traditional venture capital firms and people who will want to work on Junos.

Q: Does getting an investment from Juniper improve an entrepreneur’s chances of being acquired by Juniper?A: If they’re part of the Junos ecosystem, we don’t need to acquire them. We don’t need to own everything. The intent is for the entrepreneurs to create value for themselves and the Junos base. We will acquire companies and the decision there will be based on the intrinsic value of the company, not its capital structure or who has invested.