#ActBeyond with Eva Harasewycz on Venture Clienting I Siemens Energy

Meet Eva

Eva is Venture Associate at Siemens Energy Ventures and firmly believes that industrial companies that do not strategically use startups as a resource of innovation will not be able to sustain themselves in the market in the long run. She considers it a priviledge to work with startups from all over the world, such as Percepto and unicorn ScoutBee, who are positively changing the world with inventiveness and passion. When asked about her job, you can quickly see the sparkle in her eyes, and you will learn that startups are by no means hopeful dreamers, but highly professional specialists with vision. For the future, she hopes for more diverse teams and more women in the industry.

For Dummies: What is Venture Clienting? 

Well, as the name suggests, a company becomes a client of a startup. It's a simple venturing process that allows companies to purchase startup technologies early on and benefit from them. It may sound like a regular purchase, but venture clienting can't be compared to that. The collaboration involves significantly increased risks, which is why our Venture Client Unit employs the same tools to assess a startup as a traditional venture capitalist. Our processes focus primarily on comprehensive risk assessment. Nevertheless, venture clienting is currently very en vogue because it enables companies to work with hundreds of innovative startups in a very strategic way, not just investing in 2-3 startups per year.

What are the advantages for companies and start-ups? 

As an investor, it can happen that you can't invest in the best startup simply because the cap tables are already full. But there's nothing wrong with working with them. For us at Siemens Energy, the main advantage is to work with the best of the best and at the same time give something back to the startup ecosystem, making it a win-win-situation. In a way, we are expanding our own R&D budgets because startups are often well-funded while assisting the growth of the startup with our knowledge and resources. We do however expect a timely return on investment within a year for every venture client project. We usually measure this with parameters such as cost savings, time-to-market, or revenue. This allows us to quickly create value for the company. Once a solution has been validated and successfully tested for a specific area, the solution can be applied throughout the entire company, amplifying the positive effects.

A decisive advantage, of course, is that it is very cost-effective for us. Normally, PoCs range up to €20,000. The collaboration is very partnership-oriented from the beginning, and even with a POC, we still have our own expenses. It goes without saying that everyone provides resources, manpower, and full commitment to the project, even if we're only talking about a POC for now.

And the advantages for startups?

For startups, this form of collaboration is almost more valuable than venture capital. Simply because young companies need customers and recurring revenue above all else. They need to prove that there is a market for their solution, that their product is validated, and that companies will pay for it in the long term. At Siemens Energy, we are very committed to treating startups as equals and being the best possible early customer for them. Whether that's through paid POCs or an attractive framework agreement that enables them long-term access to Siemens. Startups certainly benefit from working with us, but also from access to our larger customer network. Often, you can feel that it's a real learning process for their teams to "work with the customer". We enter into open dialogue and communicate in a timely manner what we expect and need. However, a decisive advantage for start-ups is their independence, as they can retain their shares.

Can you tell me more about the venture client unit at Siemens Energy? 

We started building our unit more than 18 months ago, with 27pilots by our side. As mentioned before, Venture Clienting may sound simple at first, but for the model to successfully scale and generate impact, certain prerequisites are needed. For example, a dedicated venture client unit, which acts as a link between the business and the startup. But it also requires the business side to be open to new ways of working and collaborating with highly dynamic teams. In short, it requires clear processes that all stakeholders involved understand. I know of companies that have failed with their Venture Client projects because the business side did not follow through.

We are able to generate impact with our Venture Client projects within one year - a timeframe that venture capitalists dream of!

The venture client model stands for direct impact. This is also evident in our processes. We are able to complete the process of problem identification, scouting and launching a PoC within a few weeks. Our unit sees itself as a key enabler for accelerating Siemens Energy's innovation power worldwide. Therefore, our team is globally represented. The venture client approach currently comes into play mainly in the areas of automation, data & AI, and cybersecurity, but increasingly also in other areas such as energy transition and sustainability.

How is the venture client unit involved in the operational business?

That's a great question. We are actually a central corporate service team that supports the entire organization. Equally important, however, are the Venture Associates in each business unit and region, as they know the needs of their area best. There are mainly three bottom-up approaches:

1. Either no solution is known for a problem yet, then we help identify a startup solution.
2. There is already a solution that is to be replaced by an innovative solution from a startup.
3. Or, we become aware of a startup and want to validate it internally.

Our unit supports in scoping the problem, calculating the business impact, creating the requirement catalog, and acting as a quality gate, mediator and supervisor towards the startup in all cases. We steer the procurement of the startup solution and the long-term introduction in the company (whether it's joint development, M&A, or simply a long-term service-provider relationship). The comprehensive startup sourcing process is done by 27pilots. Sometimes startups approach us proactively. This is where we want to become more open to startups in the future. Our goal is for all of our R&D departments to use venture clienting as a standard option for boosting innovations.

At what stage do startups become interesting for you?

Well, it depends. As part of our quality assessments, we check if the startup is capable of meeting our delivery requirements, as well as those of our customers. Usually, this is the case for Series A or Series A+ startups. However, there are exceptions. As Siemens Energy, we simply have to uphold our own high quality and value promise. In any case, it always requires early adopters and top management sponsors who embrace the venture client model and carry it further into the company.

How do you assess the importance of the venture client model for the innovation power of German industry in 2023 and beyond?

Especially in very turbulent times like now, the trend is more towards cutting than increasing R&D budgets. Therefore, it is becoming increasingly important to tap into other sources of innovation.

There are currently around 1.2 million global tech startups with over $150 billion in funding*. The question should be, how much of this money can corporates use to be innovative ourselves?

I am firmly convinced that the share of startups being a source of innovation to corporates will double by 2025. For some industrial firms, venture clienting has already established itself as the new venturing standard. More and more corporates are turning to this vehicle because it is a very time- and risk-efficient process to be innovative and disruptive. The venture client model is simply the best of both worlds. Especially for somewhat skeptical companies, the model offers the opportunity to invest little capital and yet achieve innovation. In addition, companies even benefit from the culture and mindset component through collaborating with startups.

I firmly believe that this approach can help German companies to overcome the "not invented here" mentality by providing an answer to their pressing cost and revenue growth goals. Strategically set up as a partnership program in business development or R&D and deeply anchored in growth strategies, venture clienting will quickly prove to be what it is: an immense resource.

Thank you Eva for the interview and sharing your passion with me!

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Relevant resources

• Siemens Energy Ventures
• 27pilots
• THE NEXT BIG THING TO BOOST YOUR INNOVATION – THE VENTURE CLIENT MODEL by Capgemini
• [Book in German] Kaufen statt Investieren! Wie Sie mit dem Venture-Client-Modell Start-ups strategisch nutzen by Gregor Gimmy
• Bloomberg I "Startups Raked In $621 Billion in 2021, Shattering Funding Records"
• manager magazin I "2021 floss Rekordsumme in deutsche Start-ups"
• *YouTube I DIA Amsterdam 2017 | Thought Leadership – BMW