As head of Agilent Technologies Inc.'s corporate ventures unit, Maximilian Schroeck operates in a setting that he describes as a "dream unto itself." Agilent's four core businesses combine to make the company an attractive partner for venture capitalists.

Agilent provides test and measurement products to the communications and electronics industries. Its other businesses are automated test systems; life sciences and chemical analysis; and a range of semiconductor devices. Thus Agilent Ventures not only can test early technologies but it can also serve as the first target market.

"That makes it a lot easier to make the argument with venture capitalists" to bring Agilent into deals, says the 41-year-old managing director. "That strategy has kept us afloat even while the organization was going through serious difficulties."

Palo Alto, Calif.-based Agilent was spun off by Hewlett-Packard Co. in a 1999 initial public offering. Agilent then went on a classic roller-coaster ride, first climbing high on acquisitions and then plunging along with the telecommunications and semiconductor industries. It posted huge losses and shrank its work force by nearly half. After a three-year restructuring effort, Agilent clawed its way back to profitability last year.

Unlike many other corporate venture arms, Agilent Ventures proved its staying power even when the parent company downsized. But then the company has always been a strong proponent of R&D, investing about 12% of revenue in R&D on average annually, Schroeck says.

A native of Munich, Schroeck was hired in 2001 to form the venture unit, which seeks to help the parent stay abreast of innovation by investing in startups. Back then the company was looking to strengthen its capabilities in optical and wireless communications, as well as the life sciences arena. That overall strategy hasn't changed, although the emphasis has varied over the years. At the outset, for example, the unit ramped up its optical investments. The focus then shifted to wireless technologies, and more recently to life sciences.

The ventures unit is part of the parent's corporate development operation, which also includes the M&A team. Both groups report to John Eaton, vice president of finance and corporate development.

Unlike a few corporate venture units that give principals carried interest, or a percentage of profits as part of a compensation scheme, Schroeck and his core team of six get the same corporate package as everyone else. "Having a carry creates massive tension between our team and some 38 people from the labs whom we work with everyday," he explains.

Part of Schroeck's job is to work closely with the chief technology officer and help "articulate the technology road map" for the enterprise two years out. This road map then helps guide the company - and external VCs - toward the kinds of deals it wants.

To screen opportunities, the startup technology must meet both strategic and financial viability tests. If an investment passes the first test, it is run through the due diligence process and brought to the investment committee, consisting of CFO Adrian Dillon, Eaton and Schroeck himself.

Agilent Ventures set out to invest up to $100 million a year. Although it doesn't disclose actual investment amounts, a typical outlay falls between $2 million and $10 million.

While there have been no realizations from its 27 venture investments so far, Agilent has formed 124 business relationships with startups. Most of these are R&D agreements, though some have evolved into commercial relationships.

"That's a measure of success," says Schroeck. "It's all about implementing concrete needs of the company." - Vyvyan Tenorio

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