What do you do at Verve Ventures?
We have two distinct groups that invest in startups via Verve Ventures, namely private individuals and institutions. They have different motivations for investing and thus have to be serviced in a different way. I’m the main contact for institutions.

What kind of institutions are those?
We have corporations such as Swiss Post, the health insurer Sanitas and the media house Tamedia as clients. We also work together with the NEST pension fund for nearly 3 years, as well as with foundations and family offices.

These are different beasts, what are their motivations to invest?
There are two main reasons, one is financial returns and the other is entrepreneurship and innovation.

A pension fund such as NEST is primarily a financial investor, I suppose?
Yes. They see startups as private equity. An institutional investor such as a pension fund typically has a set allocation for private equity and this is where venture capital fits in. It is an illiquid investment with a long time horizon and a low correlation to public equity markets and because of these characteristics, the expected return on investment is higher. But also institutional investors driven by financial returns are interested in helping to develop products and services that benefit society.

There is a non-monetary return on investment, so to speak?
The economy is not just made up of big firms with household names, there are also small outfits that are worth investing in and many people realize that. Even the biggest companies of today started with a small team and a big idea.

Coming back to the point of asset allocation, how does working with investiere differ from investing in a fund?
We make it visible to our clients what the investment opportunities are. A fund is a vehicle that gives you a return figure after some years, but with Verve Ventures, you’re very close to the entrepreneurs and the development of their company.

The institutional investor can decide what they want to invest in?
Yes. You can define focal points, for example, startups in specific industries or in a specific stage of maturity. But for those who want to rely entirely on our selection process, we also offer the possibility of participating in all our deals and growing their portfolio alongside us.

How much know-how is required by the institutional investor?
It’s easier if people have made their personal experience investing in startups. But the main thing one should bring to the table is the curiosity to delve into the topic. You can start small and build up know-how on the way. We’ll help you to avoid errors. It isn’t necessary to build your own in-house team of startup specialists. These investments can be managed within existing structures.

What about family offices, are financial returns the main driver for their investments?
Family offices often have a clear mandate from their families what type of investments they can do. Many of them invest in startups because their principals have a long investment time horizon that even spans generations. This is “patient capital” in its true sense. Since many fortunes have been made by entrepreneurs, they have a natural connection to reinvest their money in an entrepreneurial fashion. They’re not just interested in protecting their wealth, they want to allocate a part of their fortune in a space where it is possible to create significant new wealth as well. We offer family offices the opportunity to meet talented young entrepreneurs and to exchange ideas with them. Direct access to tomorrow’s leaders is much more rewarding than just a line in a securities account statement.

Let’s talk about the second type of institutional investors, the corporations. What drives them?
Recently, Severin Schwan, the CEO of Roche, said in an interview that external innovation is crucial for Roche because 99% of the innovation happens outside the company. If you realize this as a CEO you must ask yourself how you can find innovation that is relevant for your business. And this is also the typical question we get from corporates.

And how do you answer that question?
Verve Ventures was founded on the idea of making the intransparent startup market transparent. New firms are born every day. It is our daily business to gather information on them, to understand what they do and to assess if they have the right team to pull it off. A corporation that works with us can save time and money because it can tap into our knowledge about the startup space. And since we see the vast majority of deals before they happen, we also have a solid understanding not only of single startups but also of their competitors.

When you have scouted startups that might be relevant for a corporate client, what happens next?
We analyze together with our clients how these startups fit into existing activities or how they might enable a whole new business. Improving incrementally what you do is nice, but the second case is much more interesting. How can a corporation use its competencies and assets to enter in a completely new field? These are the most exciting discussions.

How will the corporate then work together with a startup?
There are several options. For instance, the corporation might just become a client. Or it could start a pilot trial. Or it can opt for the most consistent form of working together, by becoming a shareholder.

If a startup is very exciting, why not just buy the whole thing?
Because in business, like in private matters, there is a process of rapprochement, not just crazy love, that leads to a lasting marriage. Besides, this isn’t just a one-way street where the corporation decides what it wants and then it happens. The startup has something to offer that the corporation wants. This means that its negotiation position is strong. And startups want to understand if a corporate is a friend or foe and if working with a corporation will bring it to another level or just slow it down.

Who, in a corporation, is responsible for startup investments?
Usually, it’s a team that reports directly to management, but in the end, it’s always a matter for the boss. Investing in startups is a leap into the unknown and has to be done against internal impediments. If you have a million to invest, you can invest it only once. And if you have the choice between investing in a machine that makes you a bit more efficient or in a risky investment that might not contribute to your revenue for a while, the latter option will always lose out if top management doesn’t stand behind it.

You talked about one million, but how much do you really need to invest?
You don’t need a multimillion budget because, in the startup world, more money doesn’t automatically yield better results. You need to invest intelligently. Our clients invest amounts that start at around 300’000 Francs per startup.

What kind of companies should think about this way of innovation?
The starting point is always: which kind of products and services will you offer in 5 years? Every company should think about it. Now, many companies are run to be very efficient. However, this typically leads to just a few people thinking about how future-proof their company actually is. And since Switzerland consistently comes out top in ranking about innovation and we have startups that are world-class here, every company, should be interested in getting access to them. You have more to win than to lose. If you don’t invest in the end you still gained access to new ideas and business models. It should be imperative for every CEO to think about this. Innovation doesn’t just happen by accident – you need to work hard for this.

Do you see the CEOs investing privately in startups, not via their company?
Yes, we see this a lot. They run their company during the day and come to our investor meetings in the evening, where they have exposure to new ideas. The result is the same: They learn!

Again, if a corporation wants to work together with you, how much work is it?
We tell our corporate investors that they should be ready to personally invest two hours per month for an exchange with us about what is happening in the startup world. These two hours usually are important “Aha”-moments. It confronts management with ideas and people they don’t meet in their daily business and forces them to rethink their business and explore new territory, often driven by new technology.

How important are institutional investors for Verve Ventures?
In 2018, institutional investors contributed around a third of the 30 million we invested. I think there is a huge growth potential for corporate investors because they have ample financial firepower. But the private investors are also very important because they usually invest much earlier, and are ready to take more risks.

What do you tell corporations that say they’d rather scout for startups themselves?
They’re very welcome to do that. But they still should consider working together with us because that’s what we have been doing for a decade now. It’s easy to come up with a list of names of a few startups. Everybody with internet access can do that. The difficulty lies in separating the wheat from the chaff and getting the whole picture. That’s our specialty. There are 10 people in our investment team that works as an extended arm of a corporate team and this allows you to dig much deeper and make better-informed decisions.

What do you like most about your job?
I see myself as someone who can create connections between people in the old and in the new world. I know what kind of startup could be interesting for which corporation. This is beautiful about being based in Switzerland. You can get to the right people quite quickly if you make an effort. This is also an argument why startups should work with us. We can open interesting doors for them.

As CEO of Valiant bank, did you look at startups too?
Yes, but I was primarily looking at startups that have useful solutions for us as a bank. Valiant was, for example, one of the first institutions to use Sherpany’s shareholder management software.

How is working in the startup world different than being CEO of a Swiss bank listed on the stock exchange?
I’m fascinated by the spirit of transformation that permeates the startup world, by the fact that people from different disciplines band together and start from scratch to reach a common goal, without being able to rely on established structures. The mental state is one of permanent insecurity, but one of great freedom as well.