from left: Berthold Baurek-Karlic (Venionaire Capital), Hannes Cizek (RZB Group), Jörg Skornschek und Daniel Strieder (Cashpresso), Michael Höllerer (Executive Board RZB Group), Paul Kaiser (RLB Oberösterreich). © RZB Group

Raiffeisen Zentralbank AG (RZB Group) selected Cashpresso as the winner of its “Innovation to Company Startup Challenge”. Cashpresso offers its customers a quick and easy way to borrow money via mobile phone. The Viennese FinTech receives an innovation bonus of 10.000 Euros and – even more beneficial – Raiffeisen is offering the startup a long-term cooperation. This is for both sides a win situation: “While traditional banks profit from the dynamics of FinTechs, they need on the other hand the know-how, data and systems of big banks to scale their product and services”, says Michael Höllerer, a member of the RZB Group executive board and responsible for digitalisation and innovation. Raiffeisen will present the results of this cooperation in the second half of 2017.

Second places go to Blue Code and purchased.at

Besides Cashpresso, the Austrian startups Blue Code and purchased.at [Update 2019: purchased is no longer in business] were invited to the final pitch at the RZB Group headquarter. Blue Code is offering a payment method for smartphones while purchased.at is a payment solution for merchants of digital goods. Our CEO Berthold Baurek-Karlic mentored all three startups, helping them to prepare for the pitch. As operative deal flow and analyst partner of “Innovation to Company”, Venionaire identified and analyzed for RZB Group more than 87 startups in Europe with a focus on payment solutions. The startup challenge was the first milestone for Raiffeisen in its corporate startup engagement strategy. The bank is now developing its own accelerator program, which will have certainly a huge impact on the Austrian startup ecosystem.

Innovation to Company

Innovation to Company is Europe’s biggest Corporate Innovation Challenge: RZB Group, A1, AccorHotels, Microsoft, New Frontier Group, Post, and Verbund invited startups to work with them on specific challenges. The aim of this initiative is to merge the innovation strength of startups, with international networks, strong market positions and the financial power of large corporations.

Our friends from IXOLIT are extending their payment solutions portfolio by investing a six digit number in the German startup SEPAexpress. Ixolit also supports the startup by integrating their payment solution into their own payment gateway IXOPAY. Among others, the Austrian Fintech experts Bernd Egger and Michael Müller (mPAY24 and co-founder of paysafecard) as well as Michael Rudhart, CEO of Windata, are already invested.

SEPAexpress is a white-label DirectDebit solution for 3rd party payments. Founder and CEO Viktor Brenner developed the product especially for payment providers as an easy installable, secure and affordable service for DirectDebit payments. DirectDebit is a very common und often used payment method in Europe. Almost every second costumer prefers paying with DirectDebit over credit card. Biggest advantages of DirectDebit for merchants are the low costs of transactions and high preference by costumers.

SEPAexpress is already the third investment of the Austrian IT company and payment provider IXOLIT this year, which is getting more active in the field of early stage investments. They invested a five digit number into BarriqueAffairs, which are producing a luxury Cooking Spoon made out of old wine barrels, and launching purchased.at, a payment solution platform specialized for merchants of digital goods.

We are more than happy to support them with our PR services regarding the transaction. You can read the full press release in German here. If you are interested in getting your transaction in the media, just give us a hint.

Corporate Venturing found its way to the forefront. But how can corporates manage the digital transformation process? Our CEO Berthold Baurek-Karlic wrote an article about this topic for the finance & controlling journal “CFO aktuell“, published by “Linde Verlag”.

In his article he emphasized the need for more institutionalized cooperations between startups and big companies, which can be summarized as Corporate Startup Engagement (CSE). Normally, corporations begin their engagement with a sort of “innovation radar” – screening existing startups. At the same time (or later on) they enter a “Trail-and-Error”-Phase followed by a consolidation period, in which they develop a mix of measures and finally incorporate them.

Note:
One of the most critical for accelerators and corporates are negationations about the startup valuation. We developed a startup valuation tool to help with that.

[hubspot type=cta portal=5314519 id=bc2a7bcd-bcee-4a08-960b-b43a6cea4bfe]

Read the article (in German) for more details about corporate startup engagement or simply contact us. We are more than happy to help!

Download the article.

Those Star Wars aficinados among you may well remember the episode: Darth Vader captures Han Solo and Princess Leia on Cloud City (please note how appropriate the name is in today´s era) to bait Luke Skywalker to come to the rescue which, unsurprisingly, he does. As Luke is a young and unexperienced Jedi, he loses the duel but he manages to escape – finally defeating Vader in the last episode. As morals of stories go, it was the principles, challenge and learning process which made Luke a stronger Jedi. Luckily, CVC can be the Force in our version of Star Wars, providing benefits to both the Empires (corporations) and the Skywalkers (start-ups), allowing them to grow with each other.

So what is CVC? In short, when a corporate fund directly invests in an external start-up, classically by taking an equity stake in the company (through a company-internal or external fund). However, the galaxy of involvement can be very broad: from corporation funded incubators and accelerators, or to start-ups which can even be incubated in the parent company (thus making it an R&D hybrid), to strategic alliances and collaborations, all of which is referred to as “corporate venturing”.

Changing times they are

Corporate Venture activities started before the 1970’s as a niche investment strategy with few players who had a strong technological background: however, this never became a market standard, spilling over to other industry sectors. But now, in Yoda’s words, “the time is commander”. The digital revolution or transformation is challenging every field of business, changing the way we collaborate at work, the way we organize and manage company structures and value chains. Demands and habits of employees and clients have been changing as well. The difference to the changes which occurred 20 years ago is the speed behind these developments – innovation was never so fast and companies have never before been forced to be as agile as they need to be today. Start-ups have been at the forefront of this technological evolution, disrupting the established ways how large companies are operating. For instance, it is no surprise that Hewlett Packard recently split its technology business from the PC and printer business, as the latter is expected to fade out eventually. Margins are under pressure, new products are needed and technologies are driving changes in many fields, too many to solve all of them internally, and if so, by assuming considerable opportunity costs. The consequence: large corporates are finally stepping again into the arena of Venture Capital, which means that there is a lot of capital paired with strategic interests on the rise. According to a report by 500 Startups (see Hubspot,  p. 25 and 30), more than half of the 500 largest public companies are engaged in some way of corporate venturing, with three European countries in the lead: France with 23 out of 25 companies, Germany with 15 out of 21 and Switzerland with 10 out of 14. According to Global Corporate Venturing, over 1790 CVC deals were executed in 2015 totalling a worth of 75,4 billion USD, five times the amount executed in in 2012 (see www.globalcorporateventuring.com). The Force is already visibly at work!

Corporations – benefit they will

“To be or not to be” – as a company, if someone does more effectively what I do, I seize to be relevant. Alas I can research and try to outrun the others, and or, be involved in the ecosystem of my market by investing in the right start-ups, partake and sponsor the right incubators and accelerators to find the technologies which can enhance my product/ supply chain/ route to market / market infrastructure. That very much depends on the corporate’s investment priorities.

It’s in the numbers: it is well understood that the “next new thing” can happen anywhere within and outside of the corporations as such. Maintaining a long-term investment in the internal R&D not only is costly and might also be risky – they simply might not find that precious next new thing. In comparison, CVC operates under a mid-term perspective, with lower costs and average risks, allowing corporations to essentially externalized their R&D. They can cherry pick whom to invest in and it diversifies the winning options and risks as it can very much be kept independent from the core business without limiting potential high returns. Also, it most certainly may help to keep oversight if your M&A team decides to strike.

Jedi practice: chances are, when you practice something with someone else, you’ll put in more effort. Start-ups are lean – if they have to fail, they better do it fast – being tight on capital means becoming very creative in how to reach targets. Having a younger fitter Jedi partner keeps us in shape simply because we need to adjust to their (faster) speed. Engaging with start-ups, investing in talents and innovations, leads to faster reactions and helps to succeed in direct competition within a sector.

“Unlearn you must, do or not do, there is no try.”

Yoda encourages young Skywalker to undo old paradigms. We have experienced a true rise in acceptance of innovations, understanding of the digital economy and willingness to engage with start-ups. As part of a holistic digital innovation strategy, Corporate Venture Capital has become a must in 2016 with respect to our core markets Austria, Switzerland and Germany (ASG), particularly if we regard the abovementioned numbers. In its recent publication of 10 Big Venture Capital Trends by Inc Magazine, an increase in Corporate Deals and sprouting of Incubators and Accelerators (usually lead or sponsored by corporates) are among the first two most important trends mentioned. Alas, we are already unlearning the old ways: Do you must, may the Force be with you!

For more infos about Corporate Venturing and how we can support you in this area, please contact us directly.