Dr. Josef R. Wünsch

Managing Director: BASF Venture Capital GmbH

Berlin, June 2011

BASF Venture Capital GmbH

The Corporate Venture Arm of BASF Group

Enterprising KnowledgeNew Forms of Innovation Partnerships

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Corporate VenturersHow do they create value?

Limited Life Expectancy (most dangerous activities) *

Rock climbing w/o rope

Sky diving

Corporate Venturing ….

A few have survived and prospered … many have not

Value creation model appear to have been flawed

*P. Morris, EVCA 2008

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Venture Capital Basics

“Deal Flow”

Select & Invest

Grow

Business not as good

as initially thought…

Cash-in returns

Write-off

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Field of OperationBASF’s Innovation Matrix

ExploratoryResearch

New BusinessDevelopment

Plant Science

FutureBusiness

Venture Capital

TechnologyPlatforms

Marketing

BASF active BASF NOT-active

New forBASF

Establishedat BASF

Technology

Market

SeparateLegal Entities

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Why does BASF foster Change …

FIX

TRANSFORM

INNOVATE

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To developstrategic insights

To build strategicbusiness options

emerging technologies

key market trends

novel business models

business plans

joint project development

joint market entry

side-letter agreements withportfolio companies

option to acquire portfoliocompany

BASFBusiness

- existing- emerging

- future

strategicinsights

businessoptions

technologyaccess

To access emergingtechnologies

contacts to innovative service providers,suppliers or customers

joint technology development

joint commercialisation

BASF Venture CapitalStrategic Objectives

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3 Areas of Strategic Support:

Identify disruptive technologies forestablished technology platform ofBASF Group

Complement projects of BASF FutureBusiness

Leverage external skills in the area ofGrowth Clusters

Financial Performance Indicators:

Assess opportunities to achieverisk-adequate return on a singleinvestment

A solid financial return requiresdiversification on technologiesand markets

Window on Technology

BASF Venture Capital GmbHKey Objectives

Risk-adequate Return

on Investment

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Corporate Venture CapitalStrategic vs. Financial Objectives

Strategic Objectives are Very Important to the Corporation but….

without Financial Discipline around the Investment Mechanics, it is

prone to become a Black Hole for Cash

how Strategic can a Bad Financial Deal be?

The Corporate Venturer knows:

Be Strategic when you look at Investment Opportunities

But be Realistic when it comes down to Financial Risk

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Key Parameters of BVC

Founded April 1st, 2001

Corporate Venture Capital firm of BASF Group

Headquartered in Ludwigshafen

14 Investment Professionals at present with offices in Lu, Fremont (USA), Hong Kong, Tokyo

Vested with € 150 million

Equity investments of € 1 million to € 5 million per investment

23 direct investments at present

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BASF Venture CapitalMission Statement

What we do:

EUR 150 m Fund

EUR 1-5 m / company

Stake 5-25%

Co-investor

Board seats

Focus: Innovation inchemistry, material science,biotech

Series A onwards

Cooperation's portfoliocompanies

Exits: IPO, trade sale

What we don’t do

No seed stage investments

Buy secondaries

Finance suppliers/customers

Invest in public companies

Finance projects

Buy out

Do not invest in:

Pharmaceuticals

Software/IT

Telecommunication

Services

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BASF Venture Capital’sInvestment Process

~700 deals p.a.- Deal sourcing- VC Network- BASF- Fund investments- Conferences- VC Databases

Screening

~15 %Short evaluation of:- Technology- Business model- Market- Financials

Due Diligence

~5 %In-depth evaluation of:- Technology & IP- Business model- Management- Market attractiveness- Investment partners- Exit analysis

Investment

~0,5 %Contract

Negotiation

ManagingInvestments

Managing andcontrolling the

investment

Build relationshipsbetween BASF andportfolio company

En

do

rsem

en

t

€€

Exit

Sale ofshares

IPO,TradeSale

First Contact

Po

sit

ive

DD

TechnologyCharter

Key ContactMarket &

Tech ExpertsBASF

interactionBoard Seat

Term Sheet

Over 4,000 deals since 2001

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Heliatek GmbHCVC Investment combined withCorporate – Start-up Interaction

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Has BASF Venture Capital Created Value?

Financial Return

Within the targeted corridor

Strategic Gains

Often qualitative but well established

Consultancy Role

For internal senior management, NBD units, M&A, technology trends,

Future Business etc.

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