How to seek out venture capital and know if it is right for your business
Ten years ago, BP Ventures was set up to identify and invest in private, high growth technology companies. Since then it has invested over US$400 million in over 40 firms.
In recent years the company has grown in strategic importance to BP, becoming a third priority in the company’s overall strategy to move forward with energy transitioning. As such, the fund’s budget has grown from US$30 -US$40 million a year to US$200 million, with recent investments including AI firm Beyond Limits, RocketRoute, and Fly Victor.
In an exclusive interview with TechHQ, Akira Kirton, Managing Director – EMEA & MOW, BP Ventures spills the beans on how investments are made.
How do you know what kind of companies you want to invest in?
At least 70 percent of our investments are high network, strategic and aligned with our current strategy, but we are also opportunistic, we do sometimes see a great a company and if we believe it will fit and deliver value we invest.
At a high level we are not stage biased, we invest in companies even before they are looking for it from US$250,000 to US$30 to US$40 million for late stage investment.
Most important for us is our belief-set that we see a pathway to helping the company, but also to create value internally for BP.
Besides money, what do firms get from BP’s investment?
Alongside the equity investment, we always negotiate the commercial agreement so a company can access BPs brand or engineering capability or services.
We invested in Solidia Technologies, for example, and we helped the company develop its commercial business model.
One of my team members helped build their business plan and our technology transfer and licencing team helped them find the best way to achieve sales and revenue growth.
How do you scout potential investment opportunities?
We source in two ways predominantly. One is word of mouth, being physically present in markets and actively attending conferences and engaging with the external bench capital community, as well as engaging with our board members and investors.
We also engage with our networks to get access to and to find out what companies are doing. Because we have co-invested with over 200 other venture capitalists and corporate entities that word of mouth network is pretty powerful.
The second is internals, we source many of our deals from the 70,000+ BP network. Many of the best companies we invest in, to some extent, already has a relationship with someone at BP, they have developed trust and a partnership at an early stage.
How can a company not already connected to BP get on your radar?
We have an open access portal so firms can always email BP Ventures and send a teaser and we will look through that and contact the company. I get approached a lot on LinkedIn but I haven’t made an investment yet through that source of contact
What other advice do you have for businesses seeking investment?
Attending the right conferences, researching your sector and being clear on what your audience wants is critical. I think, before that though, is making sure, if you are seeking money, what does it really mean?
Clearly there is the potential to access the bank of Mum and Dad or money from friends or family and in UK we have seen the rise of crowd funding. There are many types of funding.
However, with venture capital I think it is important to be aware that over time you are ceding control of your company, you may still retain a 30 percent stake but you have got to be comfortable with the end result.
You are building a partnership and you won’t have sole decision rights, and you have to trust and believe that your investors will back you through the good and the bad times. Those are the most important factors. The advantage is that instead of building a US$5 – US$10 million company, it is a US$50 – US$100 million company. Growing the size of the pie is the aim with venture capital. Ultimately, you have to be comfortable with that.