BASF Venture Capital GmbH How We Live Corporate Venture Capital at BASF. October 10, 2012 Frankfurt a. M. - Germany Michael J. Nettersheim
Disclaimer This presentation contains forward-looking statements under the US Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections of BASF management and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict and are based upon assumptions as to future events that may not prove to be accurate. Many factors could cause the actual results, performance or achievements of BASF to be materially different from those that may be expressed or implied by such statements. Such factors include those discussed in BASF s Form 20-F filed with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking statements contained in this presentation. 2
About BASF 3
BASF The Chemical Company The world s leading chemical company Offers intelligent system solutions and high-value products for almost all industries Sales 2011: 73,497 million Income from operations (EBIT) 2011: 8,586 million Employees Dec 31, 2011: 111,141 4
Structure of BASF s segments Chemicals Plastics Performance Products Functional Solutions Agricultural Solutions Oil & Gas Inorganics Performance Polymers Dispersions & Pigments Catalysts Crop Protection Exploration & Production Petrochemicals Polyurethanes Care Chemicals Construction Chemicals Natural Gas Trading Intermediates Paper Chemicals Coatings Performance Chemicals Nutrition & Health 5
BASF Group: R&D expenditures by segment in 2011 Research is key to the future. New technologies and products help us to find solutions for global challenges. Corporate Research Chemicals 2011 R&D expenditures circa 1.61 bn world leader in the chemical industry Since 2005 up to and including 2011: ca. 50% increase in R&D expenditures Sales Target 2020: circa 30 billion from product innovations Plastics Performance Products Functional Solutions 21% 12% 9% 8% ca. 1.61 bn 23% 1% Agricultural Solutions 26% Oil & Gas 6
Sustainable Innovations In Growth and Technology Fields Resources, environment & climate Food & nutrition Quality of life Chemistry as enabler Customer Industries Transportation Construction Consumer Goods Health & Nutrition Electronics Agriculture Energy & Resources Growth Fields* Batteries for mobility Lightweight composites Heat management Heat management Enzymes Medical Organic Electronics Plant Biotechnology Functional Crop Care Energy Management Rare Earth Metals Recycl. Wind Energy Water Solutions Technology Fields Raw Material Change Materials Systems & Nanotechnology White Biotechnology *including growth fields still under evaluation 7
About BASF Venture Capital GmbH 8
Field of Operation BASF s Innovation Matrix Technology New for BASF Exploratory Research Future Business Venture Capital Established at BASF Technology Platforms Marketing New Business Development BASF active BASF NOT-active Market 9
BASF Venture Capital GmbH (BVC) Founded April, 2001. 14 employees with offices in Ludwigshafen (Germany; HQ), Fremont (CA, USA), Hong Kong (China) and Tokyo (Japan). Vested with 150 million. Minority investments, ca. 1 to 5 million per company. 23 direct and 6 fund investments since inception. BVC s key objectives Open a Window on Technology. Generate risk-adequate financial returns. 10
A team with mixed backgrounds BVC Germany Dirk Nachtigal Managing Director Michaela Krapp Assistant Konrad Augustin Inv. Mgr. (Economist) Claus Hackmann Inv. Mgr. (Chemist) Nils-Christoph Köhler Inv. Mgr. (Economist) Katharina Schoenemann Inv. Mgr. (Economist) Michael Nettersheim Inv. Mgr. (Biochemist, MBA) Oliver Guthmann Inv. Mgr. (Chemist) Richard Riggs Inv. Mgr. (Chemist) BVC America BVC China Pulakesh Mukherjee Inv. Mgr., Fremont (Chemist) Daniela Proske Inv. Mgr., Fremont (Biochemist, Economist) Johnnie Yuen Inv. Mgr., Hong Kong B.Sc. Chemical Engineering with MBA Sven Harmsen Inv. Mgr., Boston (Chemist) BVC Japan Fumiko Uraki Inv. Mgr., Tokyo (Scientist) 11
BASF Venture Capital GmbH Two Key Objectives Window on Technology Financial Return Three Areas of Strategic Support: Identify disruptive technologies for established technology platform of BASF Group Complement projects of BASF Future Business Leverage external skills in the area of Growth Fields Financial Performance Indicators: Assess opportunities to achieve riskadequate return on a single investment A solid financial return requires diversification on technologies and markets 12
BASF Venture Capital Strategic Objectives To develop strategic insights emerging technologies strategic insights key market trends novel business models business plans technology access BASF Business - existing - emerging - future business options To build strategic business options To access emerging technologies contacts to innovative service providers, suppliers or customers joint technology development joint commercialisation joint project development joint market entry extend geographic reach additional agreements with portfolio companies option to acquire portfolio company 13
BASF Venture Capital - What we don t do! Buy investments from other VC s ( secondaries ) Finance suppliers/customers or projects Invest in public companies Buy outs Invest in: Pharmaceuticals Software/IT Telecommunication Services 14
Investment Process 15
The concept of opening a Window on Technology Access to New Markets, Technologies, Business Models Cooperation R&D and/or Commercial BASF investment jointly with other parties Strongest Window on Technology Investment optional 16
Deal Flow How it is achieved and structured Deal Sourcing Quality Strategic Fit Quantity VC Network Direct contact BASF colleagues Through fund investments Conferences VC Databases 17
Investment Process Balancing Strategic, Technological and Financial Objectives First Contact Screening Term Sheet Due Diligence Investment Managing Investments Exit ~700 deals p.a. - Deal sourcing - VC Network - BASF - Fund investments - Conferences - VC Databases ~15 % Short evaluation of: - Technology - Business model - Market - Financials Endorsement ~5 % In-depth evaluation of: - Technology & IP - Business model - Management - Market attractiveness - Investment partners - Exit analysis Positive DD ~0,5 % Contract Negotiation Managing and controlling the investment Build relationships between BASF and portfolio company Sale of shares IPO, Trade Sale Technology Charter Key Contact Market & Tech Experts BASF interaction Board Seat 18
An Endorsement Triggers the Investment Process Formal endorsement from BASF operations: relevance for innovation strategy of the respective department, Endorsement which WoT will be used and how, that resources are provided. Upon endorsement BVC initiates investment process: BVC provides a termsheet to invest in the start-up, due diligence process is initiated. 19
Assessment of Risk-adequate Financial Return Drives Investment Decision Risk Adequate Financial Return: Weigh opportunities against risks for any single investment. Positive DD Shareholder / Board Member: Support development of the company to maximize financial returns. Overall performance of portfolio is a performance indicator for BVC: diversification on technologies and markets. 20
Cooperation between BVC and Start-ups are Beneficial for Both A start-up company supported by venture capital from and cooperating with BASF can: benefit from BASF s network and expertise advance its technology more rapidly to market maturity obtain better access to the market Powerful impetus for the start-up company. By providing venture capital and cooperating with young companies, BASF can: remain technologically up-to-date gain access to new business areas as a chemical company promote and participate in shaping innovative interdisciplinary technologies. Window on technology / Risk adequate financial returns 21
Current Portfolio 22
Investment Portfolio 2012 USA USA Fremont Boston Offices Fund Investment 23
Investment Portfolio 2012 Europe & Asia Europe Ludwigshafen Hong Kong Tokio Offices Fund Investment 24
Active direct investments Private companies June 2002 May 2003 December 2004 August 2005 November 2005 June 2006 Nanotechnology Oxford, UK Plant Biotechnology Davis, CA, USA Functional Nutrition Columbia, MD, USA Biocides Wakefield, MA, USA Printed Electronics Cambridge, UK Nanotechnology Tempe, AZ, USA September 2006 February 2007 June 2007 March 2008 September 2008 September 2010 White Biotechnology Golden, CO, USA Laser Marking Systems Widnes, UK Organic Photovoltaic Dresden, Germany DNA labeling Tutzing, Germany Nanotechnology Endicott, NY, USA Insulation Materials Northborough, MA, USA September 2011 December 2011 February 2012 March 2012 April 2012 Wind Energy Waltham, MA, USA Green Building Materials Piscataway, NJ, USA White Biotechnology San Diego, USA Flame Retarding Additives Chelmsford, USA Water Desalination Los Angeles, USA 25
Fund Investments April 2001 February 2002 August 2006 December 2007 Materials Fund Energy Fund Materials Fund Materials Fund St. Barbara, USA Vancouver, Canada Vancouver, Canada Chicago, USA December 2007 January 2012 Fund Strategy Fintech GIMV Technology Fund China Environment Fund IV, L.P. Cleantech Fund Areas w/o inhouse expertise Geographical areas w/o VC exposure Tokyo, Japan Beijing, China Seed Funds 26
Heliatek GmbH CVC Investment combined with Corporate Start-up Interaction 27
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