HP announces new venture capital fund
HP Inc., a company that stemmed from the division of Hewlett-Packard, recently announced the creation of its new venture capital fund, HP Tech Ventures. According to TechCrunch, Andrew Bolwell, who has worked for HP for 16 years and is currently known as the company's chief disruptor, will head the small team, which is made up of only eight people. Bolwell told the publication that the venture fund will focus on seed and Series A deals that bring a strategic advantage to HP. Among the fund's categories it plans to focus on are augmented and virtual reality, 3D printing, the Internet of Things and smart machines.
Shane Wall, chief technology officer at HP, spoke with the Wall Street Journal about HP's intentions in creating this venture fund.
"What we have been focusing on is investments that help us accelerate a current business, or help us accelerate disruptions that are now in the lab," Wall said.
Instead of raising money for a discrete fund, HP will be investing money from its balance sheet.
HP Tech Ventures is the second venture fund to come out of Hewlett-Packard. Before the company was split in two, it created Hewlett Packard Ventures, which still exists today and will be run separately from HP Tech Ventures.
The thinking behind corporate venture funds
HP is far from the only company that has decided to establish a venture capital arm and participate in startup funding. From Google Ventures to GE Ventures to Intel Capital, there are many corporations out there with teams dedicated to incubating new companies.
According to Molly Wood, senior tech correspondent for Marketplace, corporate venture capital investment makes up about 13 percent of overall venture capital. What's more, corporate venture capital activity has been growing. 2015 experienced the most money invested by corporate venture arms since 2000.
So why would corporations be interested in fueling the growth of these startups? Wood explained that there are two main reasons. One is fairly obvious: to make money. The other reason, however, is about strategy. By aligning themselves with some of these disruptors, companies with corporate venture arms are hoping to gain a competitive advantage over other startups trying to win over their customers. Wood used Comcast as an example. Comcast invested in a remote home security company whose technology ended up making up its Xfinity home product.
Wood said corporate venture arms are investing in startups because doing so gives them a little more control.
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