A Unique Window to Innovation for Large Enterprises: The SAP Venture Fellows Program
Andreas Weiskam, Class 13
Corporate venture capital is one way to bring innovation and entrepreneurship into large organizations. This article focuses on SAP, which was started by five entrepreneurs who quit their day jobs at IBM 37 years ago with the disruptive idea to develop standard application software for real-time data processing. Since its inception, SAP has grown to one of the largest software companies in the world with a rich history of innovation.
Innovation is the lifeblood of economies. Within smaller companies, innovation is at the core, vital for survival and growth; within larger enterprises, innovation is key to sustainable competitive advantage, but is often threatened by structural obstacles. Risk and reward structures for employees in larger companies are set up to deliver consistent and predictable results, and the priority placed on short term financial return and increased risk averseness can hamper ongoing innovation. Size, complex organizational structures, multiple locations, and different geographies, languages and cultures amplify the problem.
The SAP Ventures Model
In 1997, SAP demonstrated its commitment to innovation through the founding of SAP Ventures, a corporate investment group that provides a window into technology and business innovation for SAP. Investments are tactically guided by financial return, and the decision-making process is independent from SAP's corporate strategy. While investments do not have to be sponsored by an SAP business unit, the exposure SAP Ventures offers to market developments and information outside of SAP's core business is considered strategic by SAP.
I started working for SAP Ventures in the summer of 2006—having co-founded a venture backed startup and worked in various business development roles for SAP, venture investing presented a new and interesting challenge for me. Business development at SAP had enabled me to maintain an outside perspective while I learned how one of the world's leading software companies operates.I had most recently co-developed and implemented the SAP Enterprise Services Community, which enables customers and partners to define enterprise services with SAP. Exposing SAP directly to the opinions and requests of customers and partners through a programmatic community approach proved to be a very efficient and successful model to develop software that constituents want. Similarly, the SAP Venture Fellows Program plays a role in helping connect SAP more directly to innovative startups.
The Question that Started the SAP Venture Fellows Program
SAP Ventures is differentiated from other venture funds by its unique access to the collective intelligence of SAP—with over 50,000 employees worldwide, SAP has experts in any relevant technology and business area. The question is how to tap into and leverage this great potential. How do you harness the knowledge of Wolfgang the SaaS expert in Walldorf, Germany, Dave the mobile expert from SAP's subsidiary Sybase, or Sanjog the expert on the local SMB space in Mumbai, India? While venture capital might be alluring, how do you convince experts and thought leaders to spend time with you on an ongoing basis?
This article presents the SAP Ventures Fellows Program, founded in 2007 to foster collaboration between SAP Ventures and SAP employees and to promote interaction with the venture capital and startup community, thus helping to keep innovation and the entrepreneurial spirit at SAP strong. SAP Venture Fellows are a select group of SAP employees who work with the SAP Ventures team to evaluate prospective investments, engage with portfolio companies, and expand SAP's external network.Endorsed and sponsored by SAP executive leadership, the SAP Venture Fellows Program launched with a group of 15 charter Fellows. Since 2007, more than 75 SAP employees have participated, ranging in seniority from developers to Senior Vice Presidents and heads of industry business units. The program has been well received at SAP so far, and the number of interested Fellows far exceeds the number the SAP Venture team can accommodate every year.This article examines how the SAP Venture Fellows Program leverages the potential of SAP's network and resources. After discussing the criteria for becoming a Fellow, I provide examples of SAP Venture Fellows and their contributions, describe the benefits for each stakeholder, and outline program activities. I then highlight some additional examples, describe the recent expansion of the program, and conclude with an outlook and wider implications.
Becoming an SAP Venture Fellow
The fellowship lasts 12 months, and all SAP employees are eligible to become SAP Venture Fellows. Typically a candidate is a technical, product, field, or other subject-matter expert. Potential Fellows are nominated by SAP Ventures based on the informal support provided to SAP Ventures prior to the fellowship and on their anticipated involvement for the duration of the fellowship. If the nominees are interested in participating, a formal approval is sought from their manager. Fellows do not, however, leave their day job and become part of SAP Ventures—a critical element, since the value of the fellowship program lies in the relevance that the interaction brings to the Fellows' role at SAP and to the business of the prospects or portfolio companies, respectively. Fellows commit to work with the SAP Ventures team for an average of one hour per week, but when and how that time is used varies depending on schedule and priority. SAP Venture Fellows become alumni after their 12-month fellowships, and are invited to participate in future events based on interest and involvement; many Fellows of prior years remain close to SAP Ventures and continue to collaborate.
Vignettes
One SAP expert is Tovi Riegler, a Business Development Manager at SAP Labs Israel in Ra'anana who participated in the SAP Venture Fellows Program in 2008 and was elected an MVP (most valuable player) for that year. She helped SAP Ventures with her intimate knowledge of the region and provided many introductions to entrepreneurs and venture capitalists. During the due diligence process, she was invaluable with reference checks on management teams and in understanding deal dynamics particular to certain investments. Tovi is now Head of Technology Ventures at SAP and remains very active as an Alumna of the SAP Venture Fellows Program.
Leslie Waltke was MVP in 2008 as well. As a Vice President Human Resources Shared Services at SAP based in Newtown Square, PA, Leslie stood out amongst the Venture Fellows in her responsiveness and helpfulness. She assisted with due diligence requests from SAP Ventures multiple times, including due diligence on LinkedIn, and she was always quick to respond, insightful, and generous with her time. Leslie was also helpful with her guidance to the SAP Venture portfolio company PayScale. She gave constructive feedback and hands-on advice on how PayScale could develop an effective sales pitch for larger enterprise customers.Ranjan Das, the late President and CEO of SAP India, was a charter Fellow in 2007. Heading up the sales organization, Ranjan saw strong value in SAP Ventures being active in India: SAP's investment activity in India is unique when compared to its competition and complements a strong development presence and growing sales organization. Ranjan was very supportive of SAP Ventures and helpful with iYogi, one of our Indian portfolio companies.
Benefits for Each Stakeholder
Benefits for the Fellows include exposure to innovative ideas and companies relevant to their work at SAP, including first-hand insights and perspectives from startup companies and their executives. Such insights are distinctly different from the enterprise perspective in their immediacy and help Fellows consider the big picture and think cross-functionally. Often, SAP executives are industry and functional experts who have spent a successful career at SAP but lack significant professional work experience outside of the enterprise. The Fellows Program offers the opportunity to directly interact with startup reality as well as to actively engage with SAP Ventures portfolio companies, potentially resulting in a formal partnership. Another benefit for Fellows is the opportunity to expand their networks and gain visibility and recognition inside and outside of SAP.
Gaurav Bhatia, director at the SAP Active Global Support organization in Bangalore, India, summarizes his fellowship experience as follows.
I was primarily focused on new investment opportunities in India. Interacting with startup companies was an experience on its own. Learning and understanding how the companies were started, their product strategy, sales and marketing approach, innovation, and diversification was something which helped me nurture my skills further. I was also exposed to the due diligence process—i.e., from a financial angle, projections, forecasting, and current and upcoming competition which was a true business exposure. Above all it was an opportunity to look at the Indian market with a completely new lens. The opportunity to network with founders and C-level executives was an overpowering experience. In addition, I had the opportunity to attend NASSOM events, which gave me a platform to establish relationships with upcoming startups and ventures. All in all working with SAP Ventures was a 360 degrees exposure which cannot be gauged.1
SAP and SAP Ventures both benefit from the SAP Venture Fellows Program by receiving expert due diligence on potential investments. In addition, the Fellows Program exposes SAP to new and innovative ideas and helps SAP influence and guide companies to strengthen the SAP ecosystem. For SAP Ventures, the Program helps build a reputation as an innovative thought leader and partner across the startup and venture community.Portfolio companies and potential investments benefit by gaining access to influencers and decision-makers at SAP. These connections can result in possible partnership opportunities and provide valuable strategic as well as customer insights.
Fellows' Activities
In addition to assistance in due diligence and engagement with SAP Ventures portfolio companies, Fellows help shape SAP Ventures' investment strategy via internal roundtables.SAP Ventures brings together thought leaders on topics such as open source, enterprise collaboration, and mobile enterprise enablement. Fellows also have the opportunity to participate in "venture days," during which a select group of entrepreneurs and top-tier venture capitalists meet with Fellows to discuss industry trends. Past events have included Reid Hoffman, the founder and Chairman of LinkedIn, speaking to SAP Venture Fellows and executives, as well as Marten Mickos, the former CEO of MySQL. SAP Ventures also organizes regular breakfast gatherings for Fellows to get to know each other; these have become quite popular as they bring together employees and enable an exchange of ideas between co-workers who might not otherwise meet. Finally, the SAP Ventures team reviews Fellows' activities on an annual basis and selects the MVP or most valuable Fellow(s) for that year.
More Vignettes
One of two 2010 MVPs, Parakash Nanduri was Global VP-Office of the CEO and led the SAP Corporate Consulting Team. During his fellowship he helped both with due diligence on potential investment opportunities and advice for portfolio companies. His background and insights were invaluable for SAP Ventures during the process leading to the investment in Mulesoft that year, as was his help with connecting Mulesoft to the right teams within SAP once it became a portfolio company.
The second 2010 MVP, George Mathew was VP and General Manager-Business Objects Explorer at the time. He helped directly source an investment, helped with due diligence of another, and supported portfolio companies with strategic advice about navigating SAP. His reputation and professional network enabled SAP to invest in ExactTarget—a highly competitive investment. George was also instrumental in the due diligence of Alteryx, another investment that year, as well as helping the portfolio company Greenplum determine potential integration points and connect with the appropriate groups within SAP.Dr. Karl Michael Popp was among the early supporters of SAP Ventures. In his role as Director for SAP NetWeaver Strategic Technology Partners, Karl provided an important link to the SAP technology platform. He helped with his technical expertise and SAP know-how regarding the internal structures of the company, such as who is working on which topics and how internal projects fit with each other (or compete). Since his active participation in the program in 2008, Karl has changed roles and is now a Director at SAP Corporate Development. He remains a very active alumnus, now also providing his mergers and acquisitions perspective; this insight is helpful to understanding both how SAP is looking at the market and what the current thinking is on valuations.
Expansion: The Fellows in Residence Program
Further indicating the success of the program, the SAP Labs organization asked to co-sponsor a variation of the Fellows program designed specifically for its top talent and high-potential employees. In the Fellows in Residence Program, Fellows work on a well defined project for 12 weeks, with a significantly higher time commitment (80 percent onsite with SAP Ventures and 20 percent at the home location). After an initial onsite visit with SAP Ventures, Fellows work on a project to either help portfolio companies with SAP-related product and business development activities or to help source new investment opportunities. Ideally, the Fellow's project combines the individual's background and interest with a topic of relevance for SAP Ventures.
The Fellows in Residence Program was launched with two Fellows in 2010. Stephane Lecercle, an architect at the SAP BusinessObjects division in Paris, France, worked with SAP Ventures partner Joerg Sievert. During Stephane's 12 weeks as a Fellow in Residence in 2010, they explored and defined product-integration opportunities between SAP Ventures portfolio companies and SAP.Gaurav Bhatia, quoted earlier in this article, worked with the SAP Ventures team in Palo Alto on a taxonomy of Indian startup companies in the software and software-enabled services sector. Gaurav's Fellow in Residence project included the identification of potential investment opportunities among the startup companies included in his taxonomy.Participating in the Fellows in Residence Program enabled both Stephane and Gaurav to apply their respective backgrounds and know-how in a new context, providing them with unique insights. Stephane reflected,
working as an SAP Venture Fellow has been very beneficial for me. I met very competent people in their domain and it helped me discover a part of SAP that I didn't know before. I worked on new areas and technologies and it helped me forge new contacts. Being a Fellow gave me a new vision on SAP strategy and it gave me the opportunity to put a new point of view in my day-to-day work.2
Outlook
Since 2007, the SAP Venture Fellows Program has helped SAP Ventures make better investments, helped Fellows broaden their perspectives and professional networks, and allowed SAP to become more innovative. The program's key is the focus on leveraging and expanding the Fellows' expertise without turning them into full-time "mini investors." The goal is to further interaction with SAP in a programmatic approach without too much formal or bureaucratic overhead; balance is found in providing a framework and structure that ensures a mutually beneficial experience and by encouraging voluntary participation and ongoing involvement. Keeping the program lightweight in terms of bureaucracy has the added benefit that the SAP Ventures team has not yet needed the support of dedicated staff to run the program, though this will most likely change going forward, especially with the planned expansions.
Strong positive feedback and mostly enthusiastic participation have supported the continuation of the program since 2007. Building on the experience from the Fellows in Residence expansion of the program with the SAP Labs organization in 2010, the program is being further modified and expanded.This year's participants are given projects with concrete deliverables and choose their topic in consultation with the SAP Ventures team. As a general guideline, topics are relevant to SAP Ventures and take the Fellow's background, know-how, location, and interest into consideration. Fellows can either focus on existing SAP Ventures investments or choose a topic to support new opportunities. The first option entails supporting an SAP Ventures investment, which can either include product integration, business development topics, or both. Working intimately with one portfolio company gives SAP executives the rare opportunity of a firsthand outside-in experience and contributes to better self-awareness of SAP as an organization. The second option for Venture Fellows is to support new opportunities by producing a taxonomy that covers an overall technology, product, or business model trend and focuses on a geography, target market, or subsegment such as "Mobile Advertising in India," "Adoption of Open Source Software in the Public Sector in Europe," or "The Enterprise Software Market in China." Projects must have a written document as an outcome, but requirements are flexible in regard to length and format.To recognize the contribution of SAP Venture Fellows, discussions are underway with SAP Human Resources to make the program part of the employee performance review—successful participation in the program would be recognized by managers during annual review and affect bonus and compensation discussions. Having a direct effect on the compensation structure would mean that the SAP Venture Fellows Program could help influence the risk-and-reward structure within SAP to drive toward more innovation.The SAP Venture Fellows Program will also add an Executive Advisory Board in 2011, with the goal of further expanding the program to the senior leadership team at SAP. Members of the Executive Advisory Board will be able to hold advisory board positions with SAP Ventures portfolio companies and will consult with SAP Ventures on overall technology and business trends.Going forward, there are plans to expand the Venture Fellows Program beyond SAP to its ecosystem of customers and partners. This effort would include a CIO advisory board from global SAP customers and senior executives from large SAP partners. Directly involving customers and partners would add another unique quality to the program, one that is very complementary and would benefit both SAP Venture Fellows and portfolio companies.SAP Ventures also plans to expand on the events in which different internal and external Fellows groups are brought together around particular industry or technology topics. Such gatherings have previously been one-time events, but plans are underway for something more regular and permanent, such as a council.
Wider Implications
The need and desire to stay innovative and entrepreneurial as a large organization is not unique to SAP. When I presented the SAP Venture Fellows Program during the Kauffman Fellows Summit in Tokyo in 2009, the program received wide interest. In discussions with large organizations such as Mitsubishi and Fujitsu, the challenge of staying innovative was unanimously acknowledged. Corporate development managers were eager to learn the details and specifics of the SAP Venture Fellows program and operations.
Looking beyond 2012, the goal is to further establish the SAP Venture Fellows Program as an integral part of how SAP and SAP Ventures engage with technology startups. Given the interest in the program from other large enterprises, it may also serve as an example to others of one way to keep innovation and entrepreneurship strong in larger corporate enterprises.
Andreas Weiskam
Andreas is a Managing Director at SAP Ventures in Palo Alto, CA. His investments include iovation, Lavante, LogLogic, and Retail Solutions. Before joining in 2006, he held several business development positions at SAP. Andreas co-developed and implemented the SAP Enterprise Services Community and led reseller deals with Virsa Systems and Mercury Interactive, among others. Prior to SAP, he was part of several startup companies in both Germany and the US. Andreas co-founded Zadu, a venture-backed startup providing instant messaging technology with presence awareness in the web. Andreas holds a graduate business degree of Diplom-Kaufmann from the University of Hamburg, Germany and an M.Litt., with Distinction, in Management, Economics, and Politics from the University of St. Andrews, Scotland.
1 Gaurav Bhatia, personal communication, 23 May 2011.2 Stephane Lecercle, personal communication, 16 May 2011.
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