The details on Schneider Electric’s new $200M venture fund – Stacey on IoT

0
10
Heriberto Diarte, Schneider Electric’s head of open innovation and ventures, is leading a newly created $200 million investment fund.

When it comes to the industrial and enterprise IoT, corporate venture firms have been big investors. Which makes a lot of sense. After all, the industrial IoT requires an expertise that many traditional venture firms might not have on hand, and in many cases the needs in industrial IoT are far closer to old-school tech than they are with information technology.

So it makes perfect sense that Schneider Electric, one of the largest providers of energy equipment and software and  building management software, is getting into the corporate venture game. Heriberto Diarte, Schneider Electric’s head of open innovation and ventures, is leading a newly created $200 million investment fund and a separate incubation effort on behalf of the company.

According to Diarte, Schneider Electric believes that technology will soon change how the energy management and building management sectors operate, and it doesn’t want to get left behind. And despite spending 5% of its R&D on new technology, the company knows it has to look outside the confines of its own walls.

“The world is smarter than us,” says Diarte. “And this is a way to reach out and open our arms to the world and say, we want to collaborate.”

To do that, Diarte oversees three different programs. The first is an incubation program that he hopes will get ideas from inside and outside Schneider Electric, then will incubate five to six of them for roughly three to four months to see if there’s actually a “there” there. Diarte expects to find roughly three to four ideas each year that are worth investing some seed money in and turning into startups.

The second program is the formal venture fund, which has $200 million under management and expects to invest between $2 million and $5 million in Series A and Series B rounds. Diarte says the fund may make a larger investment, but doing so would require the approval of Schneider Electric’s management. If the company does make a larger investment it will simply expand the size of the overall venture fund by that amount. All of which is a fairly common structure for a corporate venture fund.

Schneider’s fund plans to invest in six areas: energy management; the transition to renewable energy; cybersecurity; automation software for both the home and factories; artificial intelligence; and industrial IoT. It has already invested in Sense, a company that makes a connected device to measure home energy consumption, and Claroty, an industrial IoT security company.

Diarte also has a $100 million fund of funds that he plans to use to invest in regions such as China and other places where he might not have a team or the necessary experience.

The final area where Diarte plans to find new technology is through partnerships. That’s a pretty broad category of involvement, so Diarte plans to stretch the venture fund to help seed-stage companies test ideas all the way up to providing a sales channel for established companies that want to reach Schneider’s customers. Diarte also says that, in some cases, Schneider Electric might act as a beta tester for new technology, as well as provide engineering help.

This is a significant effort, and for now Diarte is doing it on his own. He is in the midst of hiring nine staff members to join the team, with the goal of having two or three of them in Europe, one in Israel, and the rest in the U.S. With six investments already — and given how hot the industrial IoT and other sectors such as cybersecurity, AI, and building automation are — Diarte should hurry up and make those hires.



The details on Schneider Electric’s new $200M venture fund – Stacey on IoT