Award winner - Summit | CVC of the Year: Henkel Ventures (represented by Marc Thom)

0:00The European industries are some kind of unique. We are owning the domains where you need to apply AI on and so on. Okay, that's the idea. Then you acknowledge it's a marathon, not a sprint. And then it takes some more time. And if you do this, you know, then the things can go very well and can be sustainable. So we need to be more proud about what we can do. On the other side, never oversell. But, you know, a little bit more than, you know, this is maybe what we can do. We can do a lot of amazing things. So I'm very optimistic for the future. we are live

0:30Marc Thom:we are live we are live we are live we are live we are live we are live we are live we are live there's one question that the founders always ask and it's the same thing, right? when a CBC comes to the table what do you actually get from a strategic investor that they can't get from a financial one? And, you know, what's Hinkle's honest answer? And where does you do your value proposition? Corporates, if they're managed well, and CVC funds, if they're managed well, should usually have a huge network to other VCs, to other corporates. You should have access to your own, you know, business units, to the specialists, to purchasing, to sourcing, to the guys who can build facilities, the guys who can make automatic production lines.

1:30So if a CVC invests in a company and the startup needs, let's say, to build up something from the scratch, like machineries and so on, corporates usually should have the guys who help planning. On the other side, the CVCs don't usually are from investing from the balance sheet, which is then meaning that you don't have the hustle to run out of an investment if your fund runs out and the LPs are sitting in your neck. So you have the longer breath. And on the other side, of course, let's say for Henkel, we know we're in this industry since 150 years. We know a lot of companies and we can help with open doors and access also to other guys.

2:09And if you put this together and I think basically this is also of... I'm in this industry since 15 years and I have been also on the other side on the VC part, But this was always the time where if you're investing somewhere in and the corporate needs or the startup needs some support, the VCs are calling us anyway. So all the corporates in this room, they know that the VCs usually call you. We have a strong network with professional VCs. And every time they make an investment, they're asking us either to scale the company, to test it out, contacting us during due diligence. Hey, is this cool?

2:42Is this the right pricing? And so on. So the access what we are having is, as I think, is pretty good. No, I fully agree. An interesting anecdote that we CBCs always face when we get into the cap table is kind of the concerns. Do you all of a sudden do a strategic priority shift? The parent company pulls a little bit back. The funds get shut down. Now you're into fund two, right? and you've done great and you know the the performative is top quartile what are you doing differently to bridge the gap with the VCs okay so as we started with the second fund of Henkel I think what we heard already today is fund modeling and here there's an expert Mark Pencala he's a great guy he can model funds like you know even if he's drunk he can do it he's super good in this so if you want to model a fund go there he's a good guy so we also started with modeling everything so we have built very boring a few documents we built an investment proposal statement which we aligned with the whole company with the stakeholders with my boss who is the CEO of Henkel so of course we need to align with everyone then we had the partnership proposal statement which is defining what are partnerships how do we set them up when do we have a success we defined another document which is called investment committee carta where we looked into how do we want to take decisions so first you aligned with everything within your company what are we going to do, why are we doing it, and how are we doing this, and when are we successful.

4:13And if you do this, it's a boring procedure, it takes a year, and it's really frustrating, but if you have worked it out, you align on a strategy, and then everybody is aligned, okay, that's the idea. Then you acknowledge it's a marathon, not a sprint, and then it takes some more time. And if you do this, then these things can go very well and can be sustainable. You need a good team, also a good mix from professionals, from external, but also you need internal people who are not a company. So you can do a lot of things. And you mentioned the priority shifts, and that's the thing. That's sure.

4:44A company can stop this. That can happen. You know, that's the uncertainty in venture capital, which we all need to have with us. But, you know, I've seen so many strategic shifts from this season the last 24 months, like I have not seen last 15 years. Sustainability funds are now defense tax funds. You know, I'm not sure if you've seen. we have seen from generalist funds, top quartile guys, generalist funds, who really exchange six different search fields. So three are completely new. They don't even have the guys who can run it. So meaning you have invested into a fund and then they change half of the search fields.

5:20Then I think there are some more crazy examples. People who told me two years before in consumer business we never would do a hardware investment are doubling down at the moment. So this is also a lot of uncertainty. And then, to be really honest, you get more plannable security with my team. I'm pretty sure. I think just, you know, reflecting on what you said and what we have been going through on the agenda today, you know, lifting the bar, that is definitely what I see you do. I would love to get those three documents into my agents and then I can run a couple of CVCs at the same time. It'll be wonderful.

5:55Mark, here at the end of our conversation, there's something general that we discussed today. It's like what can Europe do better? So in your view where is European corporate capital generally ahead of the US right now? It depends on the industry. So we have a lot of partnerships with US based especially also from these blue chip funds from the different coasts. Usually they're calling us and try to get access to companies which are very active in Europe, so which are playing a huge role. So chemistry, for example, I think Europe is very strong. On the other side, complex engineering is also something.

6:38Europe is really strong with ABB, with Siemens, with Bosch. We are some kind of very good here. And there are so many more fields. It's industries where we are much better than other parts in the world still. And if we combine this knowledge to make it, I don't want to make an advertisement for another company, but I would like to make it because I have never seen a bunch of capitalists who understand that much about semiconductors like the guys from Merck. If you talk with Merck Ventures, with M-Ventures, the guys really understand semiconductors. That's really deep. And when you look into chemistry, you have BASF, you have Evonik, you have Lanxess, you have Ascent, and so many more companies.

7:19There is so deep knowledge in this, so specialty chemistry and co. So basically, in a clear sense, the European industries are some kind of unique. We are owning the domains where you need to apply AI on and so on. If you do all things right, we have a fair chance. On the other side, and that's also part, not every investment from us is disclosed. One of the undisclosed months is an AI company, and there's a special thing about it. So this company is clearly a domain leader in R &D AI. But when it comes to the US counterpart, they have less substance, less revenues. They are not that good, but they are very good in the narrative.

7:56They go on the stage and telling good stories. They have not that big substance, but I think they are going to be turning our decacorn. At the same time, the company we have invested in is, let's say, very down to earth and has a reasonable valuation, but has much more kind of substance. of substance and the investors now coming over from the US and asking the company to inflate the valuation because it needs to be at least at the same level there. So I don't know what's the right thing, but something in the mix between. So we need to be more proud about what we can do. On the other side, never oversell, but you know, a little bit more than you know, this is maybe what we can do.

8:36We can do a lot of amazing things, so I'm very optimistic for the future.