In my six years so far in venture capital, the biggest lesson I have learned is that you can never become complacent. A venture capital team within a large company must remain sharp to protect the principles of startup-multinational relationship building and the investment strategy. This is not unique to any single company, as building bridges between very small companies that by definition operate differently in every way possible compared to the large companies they are interacting with is always challenging. There is no set path or perfect model. For each and every company you have to find the right approach to create a mutually beneficial relationship. Venture capital can create the first stepping stone for that relationship through capital for equity deployment.
Venture capital can create the first stepping stone for a corporate - startup relationship through capital for equity deployment.
Exactly three years ago I started at Philips, as the first hire in the Ventures team led by our head of Ventures, Rich Wilmot. The timing was exciting, just as the IPO of lighting was executed and Philips shifted its full energy and focus on health technology. This stage of transformation provided the ideal starting point to revamp the venture capital strategy. A true focus on health technology meant that one of the most important elements was now in place to build a venture capital strategy on, focus and long-term strategic relevance. The latter driven by the necessity to get structurally connected to all the exciting health tech innovation happening outside of our walls, and the ability of start-ups to test, pivot and scale in a way that is difficult for a large company.
Initially we started out with a vision of a quite focused fund, building an ecosystem around one of our in-house technology platforms. We quickly learned that this scope didn’t enable us to get the full value out of venture investing. Instead of taking our own assets as the enablers, why not see how outside innovation can teach us what the right platform, business and adoption models are in healthcare? Secondly, from our origins, Philips has been a product company, selling innovative products both to consumers and healthcare providers. Enabled by a new focus on leveraging digital technology, Philips is aiming to deliver solutions to customers that are a combination of products, software and services tailored to the current and future needs of healthcare stakeholders and consumers.
So here we are, 3 years after the launch of Philips Health Technology Ventures
So here we are, 3 years after the launch of Philips Health Technology Ventures. We run a direct digital health fund - the Health Technology Venture Fund, and a portfolio of fund (LP) positions in healthcare focused VC funds to broaden and deepen our eyes on the market. We have made five direct investments to date, two in Europe and three in the US. Surprisingly, the impact has already been much bigger than we anticipated, with multiple partnerships or co-selling arrangements already created between Philips and our portfolio companies. To illustrate: LeQuest is building next generation education modules for multiple Philips medical devices; LindaCare is integrating with our cardiology workflow solution to enable remote monitoring of cardiac implant patients; Xealth enables providers to monitor our home-based respiratory solutions; and Mytonomy is building patient-education for our customers that are moving towards actionable population health driven insights.
However, we can never become complacent. To realize our investment and portfolio management approach, we have exercised a set of principles that we believe are key to the success of the fund. We treat our entrepreneurs with respect in building trust-based relationships and believe that the strongest impact for Philips is realized if our investments scale. This requires our team to get personally involved with the companies and to find the right expertise within Philips to support growth and strategic decision making. In our investments we do not force any commercial requirements. If we try to decide for the company which direction they should take based on Philips’ strategy, we lose the ability to gain insights from the agility and choices of that start-up company.
We hope to build start-up relationships through our fund that can be building blocks for Philips on its mission to improve the lives of 3 billion people by 2030; improve healthcare by addressing the quadruple aim of improved outcomes, patient and staff satisfaction and reducing costs; and drive our own digital and strategic transformation as a pure-play solution-driven health technology company.
It has been a great ride so far, but not without its own challenges as every corporate venture capital group experiences. As a Ventures team, we aim to learn from our experiences to continue improving our operation and optimizing the impact on both Philips and the companies we invest in.
Originally posted here.
Philips is a world leading health technology company with a vision to make life better for people worldwide through meaningful innovation. Making good on this promise depends on our inclusive, passionate, inspirational, collaborative and diverse team.