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April 05, 2017

Corporate VC Perspective: Joydeep Bose


“Corporate VCs should invest not only in technology adjacencies for their Business Units, but also to capture innovation in disruptive areas.”

Here is an interview with Joydeep Bose - veteran corporate VC (Intel and Cisco) and currently Executive Vice President-Corporate Strategy & Business Development at Tejas Networks - brought to you in association with Global Corporate Venturing (GCV) magazine


Q: You have one of the best track records of CVC investing in Asia over the last 16 years. What do you attribute your success to?

A:
I strongly believe that success is always a function of timing and opportunity with a bit of luck. I attribute my success to mainly three things - sector knowledge, operational experience and deep understanding of the ecosystem. Guy-Kawasaki once said “Venture capital is something to do at the end of your career, not the beginning. It should be your last job, not your first.” I relate to this a lot. I started as an engineer,designing telecom products in late 80’s, data switches, internet applications, real time operating systems, security products. In mid 90’s, I switched to sales and eventually to general management armed with a sponsored business school exposure through AT&T. 

By the beginning of the millennium, I figured out how to make a product and how to sell it. So, I thought that it was the right time in my career to be a venture capitalist. The opportunity came knocking from within my own employer and I joined Intel Capital in early 2000. I attribute lot of my successes to this “rising from operations” and every stripe that is hard earned.

Among the things I am most proud of creating an investment relevance for a remote international geography to a corporate venture value matrix, will be on top. The core competency of every geography in this planet are different. Curating the local expertise and creating the strategic  thesis for the BUs, sometimes as their mentor, coach and advocate is a critical success factor of CVC investments. The rest is execution in terms of finding the right startups that fit this thesis either in capturing innovation or enabling preferential market access. Founding team, financial viability and scale, right level of influencibility and finally an engagement interest from both ends is by no means easy, but predictive.

Q:Which of your investments are you most proud of?

A:
On the deal side, I am most proud be being an investor and being on the board in 2003/4 of a very unique local switching, routing and optical startup in India (Tejas Networks) that uses local innovation and software differentiation to capture the market and is currently the front and center of government’s make in India program. I am also extremely proud of four others investments I have in the areas of DC as a service, Cloud application migration, Cloud continuity and cloud container software in the early days of cloud evolution. The bets and the option value I helped my company achieve in these areas that were not so proven concepts then, paid rich strategic value and needless to say financial dividends over time.

More recently, I have become involved with several machine learning and AI startups. One such investment is in a company that discovers data, location analytics and sells rich targeting data to whoever needs them. It’s an India/Singapore based startup with major business in Australia and Japan.

Q: What were the learning from the various challenges you faced as a CVC investor?

A:
The biggest challenge one faces in a CVC program - especially when away from the HQ - is mindset. You need to spend a significant amount of time educating people about your market, your eco-system, the best practices that are followed in your part of the world. 

Another problem that is prevalent in most CVC programs are lack of understanding of “local innovation”.  With an industry that is maniacally focused on “outcome”, technology innovation alone can not bring the desired impact on customers. Local innovation tweaks technology, integrates use cases and create an experience that is monetizeable.  Every market may have their own nuances as far as use cases and perceived monetizeable value is concerned. Creating the hypothesis and performing a sell-side function within your own organization is a key expertise needed in a CVC program.

Secondly, CVC program thrives on “portfolio value addition”. Value addition ranges from joint solution, access to channel, mentorship, introduction to key customers etc. Securing a “Design win” is often a pre-requisite of target qualification in the corporate investment world.   Although my experience in this regard is mixed across the organizations I have worked for, this remains a single big challenge for CVCs in terms of over promise and under delivery or even worse - orphaning a portfolio soon after investment.

Q: How is Asia, where you have spent most of your career, relevant to the new generation of global innovation economy?

A: Asia is one of the largest and high growth consumption economies in the world today.Mobile user base, 4G/5G, financial inclusion, infrastructure buildout, digital nation, smart cities, you name it. From my experience of managing Asia (excluding China), I typically divide the region into four innovation hubs:

a. Australia - an early stage startup market doing pioneering work in cloud and SaaS with early signs of AI.
b. India- Completed its transition from the core competency of  Business Process Outsourcing to BPM and developed key expertise in machine learning, NLP, SaaS, AI and microservices. Having a unique local market also qualifies India to become a good target for selective IOT, smartcity and consumer internet startup investments.
c. Singapore – Most definitely a Fintech innovation hub  in collaboration with SEA and India.
d. Japan- Showing significant IOT innovation and adoption in manufacturing, AI/Robotics, and new generation of consumer electronics.

There is an unprecedented innovation nexus between industry, academia, government and the venture capitalists as is evident from the increased deal flow in each of these hubs.

Asia has always skipped a generation or two in terms of new technology adoption and with a large local market for technology absorption. Smart entrepreneurs are innovating Asia-For -Asia products and technologies  and exporting them as Asia-for -the-world where there are similarities in use cases.

Q: What according to you is an optimal CVC model?

A:  Making an attempt to generalize and create a classical or logical model for CVC investment is inadequate. From my experience, one of the biggest mistakes many corporates make is that they tie the CVC program too closely to the business units and give significant veto to the engineering managers in the investment committee. While it is important to identify investable opportunities that create preferential access to the market or enhance value of an existing product, it is extremely important to create option value by investing into companies that deal with technology in an entirely upstream space within the industry and are typically 2-3 years out from a relevance point of view for that corporation. 

I would therefore recommend two approaches–
1. Investing into technology adjacencies for the BU, and 
2. Capture innovation in disruptive areas

No matter what you do, you must be clear in terms of what success looks like and when do you know you are “done”. A lack of such goals often lead to mismatch of expectations and anything that is not measurable is highly fungible.  

Secondly, every CVC must have a serious portfolio management team. Deal makers are not typically good at bringing the promised value to the portfolio beyond financial governance. There must also be stringent accountability for the sponsor groups who promises the portfolio access to market, joint solution or of becoming an internal customer. Unfulfilled promises are damaging for the CVCs brand in the eco-system.

Q: What are the tech trends that you are most excited about?

A:In my mental model, there are two kinds of innovation activities in today’s tech universe. In the first category are those companies that are doing data discovery and selling insights that are actionable and in the second, are companies that are creating experiences out of that data (first party, second party, third party data) and monetize the outcome.

Now, the problem statement for the data discovery and insight creation part is complex but relatively linear. There are significant innovation, IP creation in this space backed by VC money. However the transformation from data discovery to experience creation with this data is a continuum that is reasonably complex. The technology that are involved here are machine learning, predictive analytics, NLP, Micro services, messaging/API management, multi-factor authentication, chatbots and the entire gamut of data sciences. 

The application of such technologies cut across several domains such as internet security, conversational commerce, business SaaS, productivity and communication and applies to both edge computing and cloud computing models. In my opinion, most of today’s innovations are revolving around this.  I am most excited about this model and I see several startups across the globe and specially in Asia focusing on this.

Q: What is the next chapter in your career?

A: After spending 10 years at CISCO and 25 years in the industry,I started thinking what next. Upon networking with old colleagues and friends, I came across three opportunities that I liked– an operating partnership with a Singapore based PE firm; Head of strategy for a Series B startup and Corp Dev role for a  pre-IPO company. I came to the conclusion that late-growth stage startups who are looking at M&A for inorganic growth options, trying to build a larger structured eco-system and looking at tools like JV for preferential market access would benefit from my corporate development expertise. And I also realized there is a skill gap in the industry in Asia in the pre-IPO space. Going forward, I shall spend my time equally between Neoleap –the accelerator, helping a VC in their interaction with startups, apart from helping Tejas Networks in its Corporate Development initiatives.

Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.