But that's probably why that is, we come back to the beginning of this rich conversation about the different models. So then the CVC cannot fit all, but all means, all the objective and the way to operate. So I think we've been discussing for quite some time before we don't mention it, the venture client model, we solve a lot of this commercial agreement, right? And the M&A division is exactly the one, as Griffin said, that should take over when the importance is so fundamental to be part of the core. So I think it's very important to see the CDC is probably the strongest weapon that at the moment is being built, to incorporate to deal with ventures. And that's also what the data suggests, right? In terms of how much capital is committed and how much people are committed and so on. But in the latest few years, especially right now, the conversation about what else there that we can combine with CBC or instead of CBC, right, in order to keep pushing the single, which is growth.

But I think one of the things that when we started to contribute to the strategy of MERS GRISE was when we in, I think it was in 2020, there was a strategic insights team created on diverse growth. That was, it was a real analyst analyzing the startup kind of community and finding relevant areas to introduce to the C-suite. It could be anything autonomous, right? Because that was huge, right? Anything that couldn't transport itself. So when we started doing these 30-40 page reports, they started to listen, right? Then we brought value to them. And that ties into what Francisco said, right? Strategic decisions to do a CVC from a start, right? And then how do you deliver on that? But I think and also, Chris, you were on top of that, right? It is the KPIs. What are the KPIs mentioned and agreed upon for the CVCs to be successful? And then everybody is in agreement around the board and the C-suite of the success of the corporate venture entity.

In our case, actually, there is a strategy team and there is a transformation team within EMBW that are really discussing the big topics and we have just a close link to them. So to bring the sort of startup perspective or investor perspective what we're seeing in the markets for them. So we're not sort of giving them this is the big strategy but we're more like reflecting on what they think is the big strategy, what we see in the market on the investment side. And what you mentioned here before, Andreas, with your question, also to the M&A team, there has to be and there should be a nice connection to the CVC. So the M&A team, if the company is still a little bit younger or smaller and they think about, okay, what do we do with it? Should we engage or not? We're very close to them. So because the probability is very, very high, we are running since over eight years, that this company is in our database, and that we have seen, even though we might have not invested, but that we've seen a couple of the rounds that they did before. So we can give them history, we can give them our understanding of what we think about this company. So that sense, there should be an exchange to improve also the other functions, but always geared towards sort of what we know from the startup world and the startup market and what we see in this market. But we're in the market, we're not a strategy team or anything like that. And we even and we don't qualify, we don't, we never say, we know better and we'll save EMBW. No. I think that a key topic here

that is very fascinating just to conceptualize some of the things that we are, if I may, right? So to kind of be discussed is on the one end, there is this idea of kind of a supply versus demand driven CDC activities. So where, you know, the, the, somehow this, the supply side, would be kind of having a strategy, right? For in somehow, that's what I want to position my company, it could be again, you know, EMBW, in fact, just from now, years from now. So please go guys and work for it. And guys means everybody including the CDC unit, right? Or it could be more demand in the sense of demand of fund in this case, right? So the startup world can say, well, I set up the unit, go there and see what's going on, right? So I can clearly see at least one anecdote, right? That the second one tend to be a little bit more, less successful and more costly, and eventually turn down much more sooner than the first one because it is a backup from the other strategy, right? Of the general core. That is one thing. So I think corporate, especially the one starting has to understand how they wanna deal with this, right? Because the second one seems to be more like a BC type of job, right? But have the money for doing that. Corporate don't have those funds for doing that, right? The second point I think is very dear to me and is a message that I very much want to promote. At least that's all the research that I'm doing and other scholars worldwide are suggesting eventually all the results speak to the fact that the CDC is defined as minority investment in young venture or younger entrepreneurial ventures by incoming friends, right? But it doesn't stop to be and probably is mostly like a strategic organizational tool. So not having the governance, let me call it that way, right? The Christmas you were somehow referring to. So the idea that the M&A department should talk to the CVC department and generally the operation should have a say about what do they need, right? I think this coordination, let me call it governance structures, right, should be at the core of the, including the board, up to the board, right, should be at the core of the discussion, or when setting up and how setting up a CVC unit, and even if we set up, how do we want to run it? So my understanding is that these governance structures, at least from the data I see and the talk that I have, is among the problems, number one, when the unit goes in trouble, when it comes to be terminated or be less relevant or be less impactful, because it's probably less kind of communication and coordination effort by the different actors, right, to make that activities of investing in startup very, very, very important. So, so I think this is something that is tend to be forgotten too frequently, in my opinion, in the light of putting a lot of emphasis on the annotation investment element, right? Rather than governance structure, and how we actually train our employees to think and happen neutrally, why they actually deal with startup is a little bit less forgotten. In that sense, I want to mention an example. There is a company that I've been talking to recently before vacation is A2A, is a utility company in Italy, right? And they set up aVC unit as well, but in a hybrid way. So they basically became an LP for a VC that then function as a GP for them. So it's a kind of like, you know, interesting hybrid model, which is also adopted by a few other firms, including here in Denmark, right? In which basically they say, you know what, the best impact is study complicated and returning on investments also a matter about knowing finance, right? But I know what I want. I know what I want to position my corporate in five years from now. So let me focus on that. Right? So maybe, and this is a question somehow, maybe, the separation is a new perfect equilibrium here to search in the new design of the new system. But everybody focuses on their own core skills, the operation of the operational element, the strategic and the financial part is actually given, I wouldn't say of source, but in some way. And I can see firms going that way. So we'll let you know, guys, how do you see this? And this is promising.

I think it's a lot about the decision gates, right? It is, you know, there's a lot of literature also on, you know, should the CBC sit at headquarters or not? Question mark, right? Because it's more do you get influenced by the normal way of running a corporation with everything included? Because one thing is for sure, our VC counterparts, they do not run corporations, right? They run investment teams and it's all about returns, right? So I think also, you know, when you look at studies around, you know, how much time does CBC use on kind of normal management? And that goes from 25% and up, right, in some cases. And that is a little bit crazy. So I think that there are many models. Well, maybe I,

I got a little back back in my history, because I think there's basically no operational model that I've not lived through. So when I started the first 16, 17 years ago, the first CVC for another utility, not ENBW, we were first starting as an internal unit. They had a lot of money to invest. They wanted to do crazy things. Then a couple of years later, they had no money, of course, anymore. Being an internal unit, even though you say before, I do need 10 years. So no money anymore. Then we did a spin-off. We took an external investor in. So we had a hybrid investor structure. So being partly CVC, partly with a bank as an investor, changing the name, so being a fully fledged CPLP structure. And then CVC became back on log and that meant that the large corporate wanted to continue in a more strategic and standalone way, which of course was not possible for us anymore because we had these other investors in and we had keyment clauses and so on, very professional setup. So this didn't work. And then finally, after a couple of more years, I started the second CVC here in the NVW. And thinking about what is the real advantage of the CVC and having seen what happens if you're not part of the family anymore, then it is in my very personal view impossible to get the synergies right. And we do also fund investments, not just as part of our mandate due to some fund investments for the community, for DINUFLOW, for making our direct investments better. I think a corporate that is trying to be LP in a VC fund will fail because they have no clue how the VC business works and how does this all tick and so on. So it's very passive. So on the day where you have sent your commitment letter, the GP does what it does and they don't care at all about what this corporate thinks. order to get strategic insights or something. But there is no synergy at all in order to figure out where the pain points of the corporate and how could we help. Because as we said before, the VC just doesn't care and he shouldn't because he's 200% just on return. And therefore, so for us, it's a great tool to do the fund investments in order to be better involved into the community. And we learn day in, day out. And we also learn that we take a little bit different. But the little unfair advantage that the CDC has gets lost in my personal view and such a hybrid model. But I guess, Francesco, as I'm running a CDC, you would have not really expected me to say, hey, let this do external VCs. So I'm a little bit biased. So that's

one thing is an I don't know, a coming trend has not been yet yet to be, you know, used.

I think, I think for small corporations, I would always suggest don't set up your own CDC, you have to have a certain critical size, because of its complexity, because of the readiness to lift this business model and to let them do it also. If you are smaller, you should really invest into other VC funds, where the investment thesis gives you insights into what you are planning or what is disrupting you eventually. So it's always like a mix. And this is what I said on the very beginning, the corporate

should analyze what they want. But Crispin on that note, right? So if what would your recommendation be if you kind of had 20 million euros to do something within CVC. It's

subcritical. I would not set up the own

unit with 20 million. No,

but would you then do some

kind of hybrid model? Maybe do an investment into a VC as a service partner or something like that. I

mean, I'm not 100% up to date with the VC as a service. I saw some of these companies five, six years ago, and they were incredibly expensive, and they were paid deal by deal, you know, so completely wrong incentive. This was not a cash on cash, because I strongly believe in cash on cash, not in some, someone makes some calculation and says they are successful. So therefore, if there is the 20 million, I mean, I think the corporate should then really think about, if I do an LP investment, do I have people in my organization that get me the benefit out of it, that are dedicated to look on the reports to meet with the VC, to really offer the strategic insights to the VC, but also connect and understand the investment thesis for every single investment from the VC in order to take this with you into your strategic meetings and discussions. If you don't have these people, and this cannot be someone who does 100 other jobs and then has five minutes to deal with that, so I would then take the 20 million and split it over, let's say five VC- investments and really having someone in the innovation department or I don't know, to really take this know how and learning and to the benefit of both the VC and the corporate. I

think you're completely correct. There Chris, but I just pitch in on this one because we're investing as LPs ourselves, my co-founder and I. And then we've held a bunch of emerging managers get off the ground and think about their fundraise strategies and so on. After 350 or so interviews as well with VCs, I kind of have a feel for what are people's fundraise struggles. And in Europe, they're massive, right? And that would be my core point here, that any corporate that could bring even a million or two million as an LP commit to a fund, as long as you're not talking the large funds in Europe, but anything in the neighborhood of 40 million, which is the very good segment of European seed funds. You definitely have a meaningful ticket there, and thus a meaningful interface towards the VC as an LP. And I think that that's a big if or a big point that you're making, Crispin. You need to have someone internally that knows how to work with that VC, knows how to interface in a way that a VC can interface and know what to ask and what not to ask. Because otherwise, you'll very quickly, as you said, be just turned into a cash cow and you'll try and do it the minimum that will allow you to get the next ticket. So, or maybe you'll even say it's not worth it, right? I can't do this. I'm taking a little bit in here and there's right. I think if you are a

corporate and want to do it, it's a matter of setting the expectations, even from the GP side of things, right? What are the deliverables? What can you expect in this collaboration? Because that's super important, right? It's like when you invest into a startup from a GP, what is the expectation? What is the communication level? How much, how little? Because otherwise it's gonna be successful.

And I think, yeah, but there's one very interesting avenue that I think has suddenly become open by the LLMs, which is that those reports that you spoke about before that would require immense analytical work to do on the whole incoming deal flow, that can be done rather efficiently now by even a one-person GP. And that's definitely a flow of information that you can give to a corporate partner that would likely be incredibly valuable, which you in no way could have ever have delivered before. That was the purview of the very large firms to be able to serve as a corporate like that.

Maybe just one more point about just circling a little bit back to the CDCs. Maybe one more point about, like I've mentioned before, a couple of points, what might help or what might not help when a corporate wants to set up a CDC. And one thing that is, I think, also something that is not sort of maturity knowledge, we actually have decided to use an evergreen setup that's in the VC world. Of course, that is sort of not the typical VC setup with these, like five year investment period raising the next fund and so on. And over the years now I've seen that this model has huge advantages for a CBC and also for the partners of the CBC and the co-investors. Why? Because with the evergreen approach and with evergreen I mean that like you of course you're like a fund, you take the money, you draw down the money when you need it, you invest it in the startup, when you do the exit you give it back to the corporate, but you have the right to redraw it. All of it, part of it that depends on the setup, but best is of course all of it. What is the big advantage when you set up the CBC what the board of a corporate really doesn't like if you're coming back every couple of years and say, I need more money, I need a new commitment or I don't know what. They are used, the corporate is used to closed end business models. Either the business model is successful, then it's growing and it's nice or it's not successful, we close it down. That's what a corporate is doing every day. And with an evergreen you can do exactly that. you can say okay I mean you I need this one commitment in the beginning and then afterwards we grow only shrink and I have to fire my people but it depends just on our own success and and sort of this close setup I think was especially for more conservative corporates it's much easier to to grasp because if they think oh every couple of years we need to recommit or do I don't know what, that's more difficult, especially for the second fund, I think. Because as we mentioned before, you need the second fund commitment after five years. Probably you don't have paid back the whole fund yet, so it needs an additional commitment. So, Nellie Evergreen has a lot of advantages and what I've learned over the last years is also in the beginning, I thought the Evergreen could lead you to less exit pressure But at the end of the day, it's more because all of a sudden you're not like a VC fund who is who has Some companies are not performing so well But your incentive to sell it is zero because well, there's still a real there's still an option value in it that it might turn around and but if I if I sell it the money is gone I can't reuse it but in the evergreen you can reuse it so your your your benchmarking and really sort of pressure on okay So the ones that are not performing so well you will not wait seven eight years to sell them actually you will do it earlier and Because you can redeploy it into other opportunities. So there's a lot of advantages. And another advantage is you're always on the buy and sell side at each point in time. So you see the market quite well, what is going on. So there's many advantages. So I at least wanted to mention that one. I think

it's an excellent way to do, you know, portfolio management, right? To make sure that you have the right incentives, right, because you also mentioned that on earlier Crispin about this, you know, make sure that you have enough money

to do follow on runs, right, because otherwise you'll be excluded from the ecosystem. Yes. And the way how we are dealing, for example, with other BC funds that we invest in, as we tell them, when we do the first fund commitment, we are in Evergreen. So if you do well, we are your partner, not only for this fund generation, but also for the next one and the next one. Guys,

we are getting close to the end. We've run for a super long time and it's been incredibly engaging. So, you know, I haven't been wanting to control the conversation too much. But I do want to make sure that we make it to the future of CVC, talking a bit about the trends and predictions. I realize it's going to be a bit of a fire, a quick fire format here. But Francesca, I'll let you go first, if you should give us your core takes on what we have coming for us in the CVC space.

So I think some of them have been already mentioned. So I'm going to mention again quickly. So one is basically looking at CBC from more like a core business value creator as an initiative and that sense of the venture client model would probably, you know, like be more primarily observed and adopted, or at least explored. Going back to the core, it's very important, especially in tough times, like the one that we're seeing now. It's a short economic cycle. So core business goes back as a lion. probably will look at a venture client in a way to align with that goal. Second is I think the use of more, the flourishing of more intermediaries, right? So we know these platforms like a plug and play or touched on ventures, right? I think more intermediaries of that kind, not necessarily platforms, will emerge because deal sourcing is a problem, right? It's a challenge, at the very least, for a lot of funds. So I see intermediaries for this improving deal sourcing will be something that I will see more. The other one is about the governance, but I'm not gonna push forward. I just want to make sure that one of the things that I continuously hear from a lot of units is they're not invented your syndrome. So the systematic rejection of solution brought from outside, from people that are in the CBC unit bringing solution and then the R&D people they say, but it didn't ask you to bring anything or this is not really what we do, how we do. So that you just story that if we're going to incorporate. I think that is something that bringing in the operations more in general, creating governance across different levels is very important. And finally, I would say what we've been discussing from the very beginning. So CBC is just one of the corporate venture initiatives, the integration on a portfolio of different initiatives. So if you have to, to kind of be fair to nail like a mosquito is different if you have to bring in down elephant. And so I have to use different double tools for that. So I think the reflection of between them within a civil corporate venture strategies will be fundamental trend. So observing and more and more in the future. I

think we will we will looking much more like the American corporations investing. So my belief is intuitive that there will be more and more CBC entities across Europe. It is also my dream and that is why I do what I do, right? That's also why we're doing this show. It is to make sure that since we get an understanding of how to use this strategic tool and it's very very important. We have more and more startups in Europe, we have more and more real businesses in Europe, the Spotify's, the Klarnas and so forth, right? We will have more and more talent coming out of that, that understands how to work with startups. So, you know, I believe in a European success story, also

on the CVC side. And then I jump in and let's be bold. I would say, I would say, strategic, pure strategic CVC approaches will disappear. That doesn't work. All the reasons we've mentioned before, especially you're getting a selection bias for founders and it doesn't fit to the co-investors. So it would be seen as there's also the institutional, so it doesn't fit. So. Second, and that's also a guess no surprise, I think the evergreen model will gain in popularity. The reasons I've said before, overall I do hope and also strongly believe that the overall weight of CDCs in the total BC community, it has grown a lot and I think it has still some potential to grow more. So if I have the numbers well, I think right now it's around 25% of total, total 20, 25% of total dollars invested. I think this could go also to 40, 50% over the next years because it is just so important for each and every corporation to play it. The larger ones. And, well, finally, and I think this fits perfectly to what Francesco just said, I do believe there are very specific different innovation tools. And the corporates that understand these differences and really decide which ones are the right ones for them and maybe combine two, maybe even three of these different tools while CBC is one of them. They can use these sharp approaches and they will be successful. So I think this is the best way to go.