Recognizing that the oil and gas industry now involves much more than drilling platforms and refineries, The Royal Dutch/Shell Group of Companies (Shell) last week launched a new venture capital fund dedicated to investing in Internet-related technologies. The London-based offering, named Shell Internet Ventures, has also entered into separate non-exclusive agreements with Technology Crossover Ventures (TCV) and H&Q Asia Pacific whereby the more traditional investment firms will scour for appropriate deal flow and provide various due diligence services.
“The venture capital fund is really about Shell in the Internet age,” said Petra Koselka, vice president with Shell Internet Ventures. “In the 20th century, oil and gas was the driver of the economy. In the 21st century, however, it?s all about new ideas, innovation, the Internet and new technologies.”
It is important to note, however, that this fund will still act like most other corporate venture arms in that it will only invest in companies whose technologies could provide a strategic benefit to Shell. For example, an investment might be made in a software development firm focused on online exchange security so as to maintain brand loyalty among Shell customers.
The early-stage fund will typically provide up to $5 million in Series A deals, and up to $15 million over a portfolio company?s private life cycle.
Koselka declined to provide information on how much Shell had thus far allocated to the venture vehicle, although she did say it was comparable to other first-time corporate efforts. She added that deal flow and any returns will be analyzed after six months in order to reevaluate the fund?s capitalization.
Neither TCV nor H&Q Asia Pacific has made an investment into Shell Internet Ventures. Instead, they expect to both co-invest with the energy powerhouse and leverage its resources for their respective portfolio companies.
“We will be working with them to find opportunities that fit into our space and their space,” said Henry Feinberg, a venture partner with TCV. “They will contribute their insight into various marketplaces and discuss with us the feasibility of companies we look at in terms of application to their business.”
While this new venture is believed to be TCV?s first official interaction with Shell, H&Q Asia Pacific and its new partner have a bit of a private equity relationship through H&Q parent company Chase Manhattan Corp.
Chase recently purchased The Beacon Group, which is a long-time partner of Shell Technology Investment Partnership (STIB), along with 3i Group.
“STIB will continue to exist, but its focus is a bit different from ours,” explained Koselka. “That one is a joint venture with Beacon and 3i Group that focuses on hardcore Shell technologies and commercializing those technologies.”