In the panel “What is the best way to invest in innovation in agribusiness” of the 12th Open Innovation Week (Oiweek), large corporations discussed the use of corporate venture capital (CVC) as an open innovation tool, answering a big question: why do large companies invest in businesses in areas other than their main markets?
The panel was mediated by Bruno Rondani , CEO of 100 Open Startups and Francisco Jardim , partner of SP Ventures, and three different corporations with investments in agribusiness participated — but they are not in these areas: Positivo Tecnologia, Bayer and BASF.
What is CVC, and what is its purpose?
Corporate venture capital (CVC) is the term used for large companies that invest in startups with the intention of creating new ramifications for their businesses.
In the case of Positivo Tecnologia — responsible for 80% of computers entering the country — the company had been created with the intention of democratizing information technology, basing its business on the manufacture and distribution of computers and laptops accessible to the population.
According to Graciete Lima , responsible for the CVC of Positivo Tecnologia, in 2016, the company that changed its name from Positivo Informática to Positivo Tecnologia, because they no longer wanted to be just a computer company, but to reach other technology radicals. In this way, they set up an investment team and started looking for other companies with the same purpose.
Occasionally, Positivo Tecnologia started to invest in agribusiness and health — areas that have intense technological applications.
Photo: Markus Winkler (Unsplash)
The chemistry of agribusiness
Similarly, BASF , one of the world leaders in the chemical field, started investing in startups to bring new technologies, digitalization and new business models close to you, with the company at the center, being the catalyst for change.
As agrotech is one of the pillars of the chemical industry, it is in the vicinity of BASF’s investments, commented Thais Perico , the company’s Investment Manager.
Another chemical company that invests in agribusiness startups is Bayer . According to Bernardo Nogueira, Head of Licensing & Investment Partner at Bayer, one of the company’s CVC missions is to transform agribusiness and help farmers make better data-based decisions.
“Every farmer makes hundreds of decisions in a crop, which in the past was based on either recommendation, or history, so the farmer has a great need to make better decisions.”
Bernardo Nogueira, Head of Licensing & Investment Partner at Bayer
The fundamental part of Bayer’s decision, according to Bernardo Nogueira, is to believe that the entrepreneur and his teams have the capacity to transform their operational areas. Within Bayer, specifically, they are looking for startups that already have a business model not necessarily with revenue, but with some adherence.
Generating value at the heart of it all
For Francisco Jardim, one of the most important — and most delicate — points of venture capital is that the country’s innovation ecosystem is starting to have too much money, with less good projects.
This tends to be a very good thing, according to the investor, because emerging economies are starting to become an “entrepreneur’s paradise”. In this case, the choice of reputation for values and skills is more relevant than the financial relationship.
Within this point, Thais Perico believes that BASF does not use venture capital as a deal flow for M&A (mergers and acquisitions), because, according to her, the company’s major focus is precisely to bring more value and changes to the sector, and not to increase BASF’s portfolio and market share.
“One of the things we look for most is to connect our portfolio companies with our business units, to create pilots, co-develop or create commercial agreements.”
Thais Perico , Investment Manager at BASF.
As opposed to most other large companies, Positivo chose to build an investment team from scratch instead of investing in a fund. Graciete Lima says that, through this strategy, Positivo wants to remain focused on its DNA, which is business building.
“The focus of the investment is to understand what they can bring to the city and the population in terms of hardware, and what these businesses add within Positivo”
Graciete Lima , Responsible for the CVC of Positivo Tecnologia