It’s the time of year when beautifully crafted clean deals are bumping into the sacred reality of European holiday plans. As I write, German and French investors are counting down the days to August when their brains will be befuddled by the heat of Mediterranean beaches and therefore unfit for business. Scandinavians have already left to barbecue fish on their Baltic islands where the broadband isn’t broad enough to work on megabyte term sheets. It’s a frustrating time for an advisor but a good time to reflect on the art of closing deals before holiday deadlines. I have as many questions as I have answers.
- Why do corporate venture capitalists remind me of the girls I was chasing in my teens, who would only find me attractive if I already had a girlfriend?
In other words, why do so many investors only want to do deals when other investors are already at the table? I’ve been reading in these pages about the lean start up and I’d like to send a copy of the eponymous book to all the beach-bound clean-tech corporate venture capitalists for their summer reading. They really need to learn how to respond more quickly and creatively to early stage entrepreneurs. Otherwise, they will only do deals that are brought to them by the slightly nimbler venture capitalists, which aren’t always the best. One corporate venture capitalists looking at one of my deals took a month to email their NDA (and they think that was quick!). My client was not impressed. No offence was meant, but some was taken. The moral of the story for entrepreneurs: don’t expect the big guys to close quickly. Approach them with an investor already on board and make them fear they will miss out. Then they will move. Corporates are more typically afraid of failing than inspired to succeed by taking risks. The moral of the story for corporates: be nimbler if you want to be more successful.
- Family offices aren’t necessarily much quicker.
Wealthy families don’t have to work. They’re wealthy! I was waiting a long time to hear from a family office on a deal last year. I subsequently learned that the principal had gone skiing in Patagonia for two months. Fair enough.
But family offices are an increasingly heterogeneous bunch. Some are adopting more professional and strategic modus operandi. Aeris Capital, the Zurich-based family office founded on the wealth of SAP founder Klaus Tschira, is a good case in point. Hiding behind its one page website (de rigueur for families priding themselves on discretion and privacy), is a growing team recruited from the contracting world of financial venture capital. Two years ago, when solar stocks were being dumped en masse, Aeris made an admirably contrarian investment in struggling US solar manufacturer Nanosolar, which limped on, but then folded. Aeris can afford to take the hit and has plenty of talent in its portfolio.
SKion, the family office of German billionaire industrialist Susanne Klatten, (which also has a one page website) has quietly but quickly built a portfolio of water technology and water service companies over the last three years. Most recently, it took German municipal water business SH+E out of administration. This followed investments in Dutch centrifuge start-up Evodos and Turkish wastewater specialist Miranda.
SKion and Aeris are new exemplars of family office investing. Dumb money, they are not.
The road to ethical investors’ doors is littered with clean tech skeletons because of the resilient myth that ‘the ethicals’ like environmental technology. But they very rarely lead technology investments because they don’t have the teams required to assess clean-tech. Morale of the story for entrepreneurs: bring a technology investor with you and the ‘ethicals’ might join the deal.