IBM Corp.'s venture capital arm is serious about investing in startups, but not in the sense that many would expect.
So what exactly is the Big Blue strategist up to?
Continue reading below
STEERING THE SHIP
IBM has been an active acquirer this summer and the streak extends several months back. See another dealwatch for IBM's M&A doings.
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Many recent deals originated in the unit's venture capital group, which mostly invests in venture funds that back technology startups. The seven-year-old group keeps IBM execs aware of budding technologies and promising startups viewed as potential targets. The VC team keeps running lists of gaps in IBM's software offerings that acquisitions could help fill.
The Armonk, N.Y.-based tech giant forges partnerships, allocates funding to venture firms and supplies tools aimed at enabling entrepreneurial businesses to find the next big thing.
Some specific efforts include:
- Forming its Venture Capital Advisory Council in August 2005 to pick the brains of active venture investors. Its members represent Draper Fisher Jurvetson, Walden International, Hummer Winblad Venture Partners, 3i Group plc, Darby Overseas Investments Ltd. and Accel Partners.
- A few months later, in December 2005, IBM opened up its entire IP portfolio (some 40,000 patents strong) to more than 1,000 startups to see what they could do with it.
- Extending its hardware and software portfolio to startups in emerging markets to jumpstart their own open source software-based initiatives, also in August 2005.
BIRDS EYE VIEW
The goal with all these initiatives: finding the greats among the startup masses. Just a few ventures linked to IBM's program include:
- Intaact Corp., which added $7 million to its coffers in May for its management software for small and mid-size businesses.
- Beijing Lingtu Software Co., Ltd., which as of April was one of just eight companies in China with a top-class mapping certification from the central government. The company doubled its revenues over the last two years.
- Caspian Networks, which has amassed $316 million in venture backing for its broadband services over Internet protocol networks. The latest infusion came in an add-on fourth round for $55 million in May 2005.
- Aptix Corp., which IBM took in 2003 to complement its Lotus offerings.
NOW WHAT?
What next big thing IBM has its sights on may be anyone's guess but one of its venture friends, Walden International, announced plans in June to invest $100 million in startups developing technology around IBM's blade servers over five years.
| Dealwatch executive summary |
Date |
Action |
| 8.2006 |
It's busy times for IBM's acquisitive software group. |
| 6.09.06 |
Walden International will invest $100 million in startups developing technology around IBM's blade servers. |
| 5.24.06 |
Intaact takes $7 million, Series B. |
| 4.20.06 |
Beijing Lingtu Software shows promise. |
| 4.2006 |
IBM's venture capital group is there to help. |
| 6.14.06 |
IBM's Steve Mills lays out IBM's strategy. |
| 12.2005 |
IBM opens its patent portfolio to a host of entrepreneurs. |
| 8.2005 |
IBM forms Venture Capital Advisory Council. |
| 8.2005 |
IBM extends its software and hardware portfolio to emerging markets. |
| 5.2005 |
Caspian Networks is one of five companies to reel in $50 million+ in venture funding in one month. |
Source: The Deal |
