Sramana Mitra: Our model is actually complete customer immersion. It’s a one-year program. Each person who gets to be part of the program has one year including side-by-side methodology training, customer immersion, customer validation, and TAM analysis. It’s not in vacuum at all. I’m sure your program is effective. I’m just comparing notes. That’s the whole point of these discussions – to understand the different processes that are working.
Let’s switch gears and talk about your external innovation methodology. When SAP launched HANA we
actually worked with the team that launched HANA. This was several years ago now, but I’m curious on what’s happening in terms of methodology evolution there.
Max Wessel: We’re substantively committed to our ecosystem. Over the past few years, we’ve pushed very deeply into driving development of open APIs across our cloud portfolios. We don’t care what the underlying technology platform is because our customers benefit when anyone enriches our application suite.
We have a network of accelerators around the world. We partner with Techstars and have built a number of accelerators ourselves. We work with any startup that needs a certain threshold of underlying customer traction to build relationships into the SAP product management base as well as with our customers. We have all sorts of educational programs there and make available a lot of capital and expertise.
Typical check size for the seed fund is between $100,000 to $250,000. We invest alongside some of the best names in enterprise technology. In 2011, SAP spun out a venture fund called Sapphire Ventures. Sapphire manages about $2.5 billion in assets primarily for SAP. There, we work a lot to make sure that we have robust coverage across the application ecosystem in enterprise apps. We engage late-stage startups. We help build relationships across SAP and the ecosystem as well as across SAP customers.
Sramana Mitra: On this one, let’s focus on your $35 million seed and Series A activities. When you say you want to see some level of customer traction before you are willing to put in investment, can you define that for us? What does that look like in your mind for a startup to qualify?
Max Wessel: Traction would be defined based on category. There are some great deep technology businesses where you invest from a seed perspective earlier on without necessarily a great deal of customer revenue. If you’re talking about something that’s a traditional SaaS application, for a traditional seed round, you may want a few hundred thousand in revenue because you want to demonstrate repeatability if there’s not a strong technological differentiation.
What I should specify are accelerator networks. Foundry Network, which is the accelerator we built around the globe, does not write checks to make investments. We just make expertise and space available. There’s no revenue or traction threshold because we’re not committing capital over a decade-long period of time.