Venture capital firm b-business partners, which is funded by 13 multinational corporates, is to extend its investment focus to include corporate spin-offs. It will start by looking at opportunities among its shareholders, which include Investor AB, SEB, ABB, AstraZeneca, Electrolux, Ericsson, Hewlett-Packard and Saab Aerospace, before looking further afield.
To this end b-business partners has agreed to facilitate the funding and development of European businesses incubated by Hewlett-Packard’s Mobile e-Services Bazaar. “The HP Bazaar is a centre of innovation for emerging mobile technologies, and promises that members of the programme will now have access to the combined resources of both b-business partners and HP jointly with our shareholder network,” says Katrin Horstmann, managing director of b-business partners.
Hans-Dieter Koch, CEO of b-business partners, said the group’s shareholders had been very receptive to the strategic benefits of the new investment focus offers. “The current need to raise cash and concentrate on core businesses makes spin-offs attractive to all corporates,” said Koch. The investor is looking at businesses valued at between EURO20 million and EURO50 million.
“Spin-offs that are just IP (intellectual property) or people are not of interest to us. Without a sales force they are better off being sold to industrial buyers. And larger spin-offs are the territory of buyout funds,” says Koch. b-business partners has already invested in Ericsson spinout, IBX, a business-to-business exchange.
The move to incorporate spin-offs into the firm’s investment strategy is aimed at leveraging the resources of b-business partners’ shareholders more efficiently. “Within our network we have the structure, competencies, processes, mindset incentives and commitment to mine opportunities, provide support and manage the spin-off process,” said Koch.
This is not the first change in strategy for b-business partners, which was set up in March 2000 to invest in early stage business-to-business technologies. With a fund of EURO750 million to invest the company found this focus too limiting and earlier this year shifted its investment focus away from the seed stage companies that it initially targeted, in favour of investing in companies at more advanced stages of development. The sector focus was broadened to include IT, telecoms and industrial automation. The firm also temporarily returned money, which it had drawn-down earlier, to investors.
Since the first change in strategy the company’s investment pace has picked up, with new commitments to Irish firm Accelerated Encryption Processing and French software company, esual. “The recent transactions indicate that the market for investments is starting to open up again,” said Koch. He believes that although lower company valuations mean it’s cheap to invest it now takes more time and money to build successful companies.