Bloomberg News

BASF’s Nachtigal Seeks China Startups for Investment Arm

March 02, 2012

BASF SE (BAS), the world’s biggest chemical maker, is considering opening an investment office in Beijing or Shanghai in the medium term as China begins to spawn its own technology startups.

Dirk Nachtigal, head of the company’s 11-year-old venture- capital arm, is now visiting China twice a year and has identified universities there as a likely source of early stage, high-potential opportunities, he said in an interview. The unit has recently invested in its first fund there, he said.

“We are seeing more and more technology development in China that is interesting to us,” Nachtigal said. “The government has put lots of money into universities in the last 10 to 15 years. Now you can see the results.”

Chief Executive Officer Kurt Bock aims to have a quarter of sales coming from products based on new technology by 2020 as the 147-year-old chemical maker moves away from cyclical commodities. Innovation younger than a decade should contribute 30 billion euros ($40 billion) in sales by 2020 and take the company closer to end consumers, he said.

China has boosted spending on education, with plans to disburse 4 percent of gross domestic product on schooling this year, Xinhua news agency said on Feb. 15.

BASF has so far channeled its venture capital activities in China through an office in Hong Kong. A move to Beijing or Shanghai would reflect the growing opportunities springing up in and around major cities.

Executive Attention

Venture capital investment in China almost doubled to a record of $5.67 billion in 2010, according to ChinaVenture, a research and investment consulting firm. That still represents a nascent stage in comparison with the U.S.’s industry, which invested $28.4 billion in 2011, according to the National Venture Capital Association.

BASF has so far pumped 150 million euros into the unit. Though dwarfed by the 1.7 billion euros it spends on research and development a year, the venture capital arm has grown in stature as Bock heaped more importance on new technology as a growth driver, Nachtigal said in the Feb. 22 interview. It has the ear of top level management through board member Andreas Kreimeyer, who oversees research.

To capture new technologies on the U.S.’s east coast, BASF opened a venture capital office in Boston this year.

BASF Venture Capital was instrumental in BASF’s purchase last year of Inge Watertechnologies AG, a startup making membranes used in water treatment. A two-day internal trade fair invited 11 membrane companies to present their startup ideas. Inge was one of them, leading to their eventual purchase.

BASF may also invest in some of the other startup companies that gave presentations, said Nachtigal, declining to give names. The unit is seeking investments in products surrounding energy management such as battery materials, storage capacity and photo-voltaic as well as wind energy, he said.

“We are looking for the top, game changing technology wherever it is,” Nachtigal said. “It’s an exciting field.”

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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