SAP Ventures, an arm of German software giant SAP AG (ADR) (NYSE:SAP) (FRA:SAP) (ETR:SAP) said Wednesday that it has launched a new venture fund. The software maker will allocate at least $650 million to the new fund “SAP Ventures Fund II.” With this, SAP Ventures will now have about $1.4 billion of assets under management, according to Forbes. The German company’s earnings are under pressure amid an uncertain global economic environment.
SAP Ventures’ AUM grows to $1.4 billion
Headquartered in Palo Alto, California, SAP Ventures is an independent entity. But it receives its entire funding from its German parent. Investing in start-ups gives the German company a sneak peak into ideas that may help boost its business. Meanwhile, entrepreneurs get an opportunity to connect with a strong software player that may help them.
SAP Ventures CEO Nino Marakovic told Sarah McBride of Reuters that the new fund will invest in start-ups operating in enterprise IT space. Large corporations have increasingly been building their venture arms to invest in start-ups. They are trimming their R&D operations and placing less emphasis on emerging technologies. Instead, they are investing in start-ups with exceptional ideas that one day they could own.
SAP Ventures already has funds, which have invested in storage firm ScaleIO and cloud computing business Box. In 2011, SAP Ventures launched the $353 million “SAP Ventures Fund I.” Its other fund “SAP HANA Real Time Fund” has about $405 million. SAP HANA Real Time Fund is a fund-of-funds, investing in other venture capital firms that fund start-ups. Corporate venture funds are financed by their parent company, while traditional venture capital funds from institutions, endowments and other similar sources.
SAP Ventures CEO blames current venture environment
Some traditional venture capital firms argue that the influx of corporate cash is pushing up valuations of start-ups. However, SAP Ventures CEO Nino Marakovic blames the current venture environment where several venture capitalists are competing to own a part of the hottest start-ups.
There are many other corporate venture firms as well. Google Inc. (NASDAQ:GOOG)’s venture arm Google Ventures invests about $300 million in new companies every year. It has more than $1.2 billion of assets under management. Intel Corporation (NASDAQ:INTC)’s venture arm has more than $1.5 billion of assets under management. Some of Intel Corporation (NASDAQ:INTC)’s popular venture investments are Vocera and Clinkle.