Blog: May 27, 2016
Topics: Innovation

HP Tech Ventures searches for startups

Chief Disrupter Andrew Bolwell describes how the venture arm works and what it’s looking for.

 

"I learned so much about gyoza in that 30 minutes, This is what innovation is about: recognizing a problem or something that could be better and doing something about it. "
Andrew Bolwell Chief Disrupter HP Tech Ventures

Andrew Bolwell burned the gyoza. He was just trying to cook up some of these delightful Japanese dumplings, but he pretty much ruined them. HP’s chief disrupter had disrupted his own dinner.

The next day he met with a startup that had invented a robotic chef. For the demonstration, the ingredients were placed to the side: oil, soy sauce, and... gyoza. Launched by an iPhone app, the robot heated the frying pan, added the ingredients in the proper order, stirred, and presented perfectly cooked gyoza.

Finding the startups inventing those solutions that matter to HP is what HP Tech Ventures is about. HP Tech Ventures will pursue investments and partnerships in disruptive technology areas that are strategic to HP.

 

 

A small team, including Andrew, Vitaly Golomb, Irit Hillel, Bob Portilla, and Mitch Weinstock lead the effort, working closely with the Corporate Development team. Shane Wall, Cathie Lesjak, and Jon Flaxman serve as the investment committee, making final investment decisions based on the recommendations of the HP Tech Ventures team.


The Daily Inc. caught Andrew between meetings with startups to learn more.


  What does a chief disrupter do?

For me, it’s all around focusing on things that aren’t business as usual. With the amount of change and the pace of change, everything’s being disrupted all the time. I just like disruption because it focuses on the new, it focuses on innovation, it focuses on thinking out of the box.


  What’s a day at work like for the HP Tech Ventures team?

What you’ll probably find us doing most of the time is getting up and away from the desk and out of the office and into the world outside to sit down and talk to startups. Our goal is to meet with at least 20 startups each week and to look through hundreds of pitch decks to find the right opportunities for HP to invest.

We get many new inquiries per day. Opportunities come in, and we work to figure out how to filter and evaluate them. We meet as a team to discuss the deals that bubble to the top and to make a decision about whether we propose an investment in them.


  What’s the criteria for investment decisions?

We look for early-stage startups. Ideas change over time, and when you get into the market you start to learn a lot. Most early stage startups pivot multiple times before they hit on the secret sauce. Very few startups exit with the same idea they started with.


That’s why what we’re looking for first and foremost is a really strong team–strong founders who are passionate about what they’re doing, who have identified a problem that’s worth solving, who know the customer that they’re after, who have developed a solution to that problem that is sustainable over time, and have a jump start on competition or intellectual property that differentiates them. They have the ability to win. And ideally by the time we invest, they might have customers who have validated the startup’s offering.

In short, we’re looking for:

  • Team
  • Market
  • Competitive advantage
  • Market traction
  • By essence of being early stage, we expect that the startups that we invest in will go through a lot of change, and we’re hoping we can support them as they go through that.


  What type of collaboration happens between HP and the companies it invests in?

This can be as informal as people from HP mentoring a startup’s founders or as formal as a licensing deal.

What many startups struggle with in their early years is scaling, and we can share our experience. We have such a huge and well established supply chain that these startups don’t have yet. We have a huge channel and distribution network.

With the Internet of things (IoT), a lot of the new startups have a hardware component to them, and HP is strong in hardware. We know hardware well and we know how to scale the hardware businesses.

For us, there may be innovation in the external market that could help accelerate our core business. A startup may have a technology that we need in an existing business, so then we make a licensing deal, and work with the business unit to insource their tech.

Or we may learn things about wave 2 and wave 3 innovations that help us evaluate our own direction.


  How is HP Tech Ventures funded?

Unlike the typical investment fund that has a set amount of money to divvy out to startups, HP will instead invest directly from its balance sheet.

The way the typical VC works is they raise a certain amount of money and invest in startups over a four- to five-year period with the expectation that those investments would exit within a 10-year time frame. They’re forced to spend the money they raise.

Investing from the balance sheet means that we don’t have a number we have to chase. We can invest as it makes sense, based on the situation. It also means that the investments we make don’t impact the budget, OPEX or P&L’s of the businesses. The money comes from a different bucket, yet helps our businesses differentiate by sourcing external innovation.


  How do we balance investment in internal innovation and external?

HP Tech Ventures is just one part of our broader innovation story. We have engineers innovating daily, hourly, in our core business. We continue to invest in research and development. We have the preeminent research facility with HP Labs. We have an incubation team. We were the original startup. We’re investing a lot internally.

We also know the world is changing faster and faster around us. There’s so much change happening that we have to look externally as well. We can’t invent everything. It would be foolhardy for us to ignore what’s happening in the world around us.


  Any final thoughts?

Everyone is a chief disrupter at some level. Although HP Tech Ventures operates out of Palo Alto, US, and Tel Aviv, Israel, great ideas are welcome from anywhere. 

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