Aligning fund KPIs with those of easy LP is highly strategic because it ensures the concurrent achievement of multiple goals. 
Harmonizing Innovation: Nurturing Strategic Collaborations
May 15, 2024
Interviewed by Nicolas Sauvage on November 24th, 2022
Gina Domanig, managing partner at Emerald Ventures, leverages a foundation in strategy and M&A at a prominent Swiss industrial technology firm to drive innovation and address emerging trends In the dynamic landscape of corporate venturing. She chatted with Corporate Venturing Insider host and TDK Ventures President Nicolas Sauvage about how the vital nexus between startups and corporates demands careful nurturing.
From its inception, Emerald Ventures embraced a distinctive approach, seamlessly weaving corporates into its limited partner (LP) fabric. Over the years, this approach solidified into a steadfast commitment to collaborate with corporates and forge strategic partnerships that accelerate the transition to sustainability. Gina underscores the significance of aligning a startup’s objectives with its target customer group and how Emerald assists corporates in propelling their transformations.
The Financial Strategic Dilemma
Gina dispels the claim that the CVC/startup relationship is a zero-sum game. Instead, she champions a philosophy that venture capital adds substantial value to both, transcending the boundaries of strategic and financial considerations. Her stance is that strategic and financial values are not opposing forces but complementary facets that contribute to holistic growth. This principle, as she explains, is a cornerstone of Emerald’s investment philosophy.
“I think that as a venture capital team, we need to generate really attractive financial returns. Otherwise, we don’t have a reason to continue to exist,” Gina explains. “But irrespective of those financial returns, if our corporate LPs don’t achieve strategic impact on their business, they will consider the relationship a failure.”
The age-old query of whether a venture capital firm leans more toward strategic or financial goals finds an elegant resolution in Emerald’s approach. Gina asserts that her firm blends both, underpinned by a commitment to nurturing robust relationships. The objective extends beyond monetary returns to encompass strategic collaborations based on the synergies between startups and corporates.
Balancing Dual Objectives
Gina elaborated on the dual objectives her venture capital team faces. While generating attractive financial returns remains pivotal, the corporate LPs bring additional aspirations to the table. These include knowledge transfer, co-investments, acquisitions, and joint development agreements. To harmonize these goals, Emerald has devised a bold system of periodic KPI agreements with each LP, ensuring a harmonious blend of financial success and strategic impact.
“With each one of our LPs, we agree on KPIs every six months, and they have a lot to do with knowledge transfer,” Gina explained. “Some have actual goals to make co-investments, others have goals for acquisitions or joint development agreements. There are many ways that the corporates are looking to engage with those startups and it also changes over time.”
The KPIs act as beacons for both parties involved, casting light on the anticipated outcomes and value exchange from the partnership. In doing so, they can set clear expectations and foster a mutual understanding of the partnership’s purpose and objectives. KPIs transcend mere metrics; they serve as tangible milestones, proof of the value created through collaboration.
Onboarding and Strategic Alignment
Gina lifts the curtain on Emerald’s meticulous onboarding process, a linchpin in ensuring strategic alignment with its corporate investors. Their unique approach involves pairing sector specialists with specific corporate partners to chart a course collaboratively. These meetings delve deep into understanding the corporation’s strategic priorities and KPIs. This engagement is supported by a technologically savvy ecosystem, including an IT platform offering corporate LPs access to a treasure trove of reviewed deals and informative three-page analyses of each startup.
Engagement is a recurring theme, exemplified in the monthly calls Gina describes as a dynamic exchange in which startups and corporates find common ground. These calls kickstart a comprehensive process of engaging with specific startups. Importantly, this engagement extends beyond their investment decisions. Even if a startup does not align with a partner’s investment criteria, it actively explores the strategic value, dedicating substantial resources to reviewing deals that could prove instrumental to the fund’s corporate partners.
“If one chooses to focus on working with corporates, having the processes in place ensures that even if there’s a change on the corporate side, there isn’t a gap in the relationships,” she adds.
Notably, Emerald Ventures’ strategic impact is not confined to portfolio companies but extends to the entire startup landscape. Emerald is different from many other CVCs as it is willing to connect startups with potential partners or customers within their expansive LP network to nurture a broader ecosystem of growth and collaboration.
Navigating Relationships
Emerald Ventures’ diligence extends to monitoring and bolstering its corporate relationships. A meticulously designed dashboard gauges the health of each corporate client relationship, employing a color-coded system to track progress. Emerald proposes KPIs to clients as a component of the value exchange that facilitates internal alignment. This data-driven approach ensures compliance with Gina’s insistence that clients communicate the value they derive.
Within this vibrant dashboard, each data point paints a vivid picture of the partnership’s status — green for robust growth and alignment; yellow indicating areas that require attention; and red flagging potential concerns. This visual representation enables Emerald’s team to promptly identify and address any areas of misalignment or emerging challenges. It encapsulates a comprehensive view, spanning the partnership’s initiation to ongoing engagements and evolving KPIs.
Gina’s insights encapsulate the essence of a venture capital firm that operates at the intersection of innovation and corporate synergy. Emerald Ventures’ journey is marked by a commitment to orchestrating meaningful collaborations, where startups and corporates coalesce to navigate the intricate landscape of business evolution. Through structured processes, unwavering engagement, and a pursuit of both financial and strategic success, Emerald amplifies a blueprint for fostering enduring relationships in the world of corporate venture.
