Corporate Venture Capital at BASF — 15 years of partnership between start-ups and BASF

Corporate venture capital (CVC) activity has increased remarkably in recent years. Between 2004 and 2014, the number of CVCs grew from 180 to more than 1,000, with the strongest growth between 2010 and 2014. This huge increase caused a lot of attention for and curiosity about CVCs in the VC and start-up scene. In the following, we report on BASF Venture Capital's experience in this area, in particular on the role of a CVC as a link between two very different types of companies: the start-up and the large company.

BASF Group and BASF Venture Capital GmbH

BASF is the world's leading chemical company, celebrating its 150th anniversary in 2015. BASF produces a wide range of chemicals and materials and is divided into five segments: Chemicals (e.g. petrochemicals, intermediates), Functional Materials and Solutions (e.g. catalysts, plastics), Performance Products (e.g. dispersions, nutrition), Agricultural Solutions and Oil & Gas. Each segment has a number of business units responsible for that part of the business. The broad portfolio of chemicals and materials is used in a wide range of industries. BASF Group sales in 2014 amounted to €74.3 billion with EBIT of €7.4 billion. Innovation is an essential part of the company's strategy: Of approximately 113,000 employees worldwide, more than 10,000 work in research and development (R&D) with a total budget of 1.9 billion euros in 2014. Over the decades, a knowledge network has been built up in which more than 600 top universities, research institutes and companies participate, working on around 3,000 research projects with customers and partners. In 2014, BASF filed 1,200 patents2.

As part of its innovation strategy, BASF established BASF Venture Capital GmbH in 2001. BASF VC's investment activities have two objectives: First, to open a windowon new technologies ("open a Window on Technology," WoT) and second, to generate investment returns commensurate with the risk. BASF VC has a fund of 175 million euros at its disposal. It has a flat and flexible organization with currently 13 employees at five locations: Ludwigshafen (headquarters), Hong Kong, Tokyo, Fremont (Bay Area) and Boston. The responsibilities of the investment managers are based on regions and/or different backgrounds, e.g. focusing on specific business areas or on financial and transactional aspects.