Daimler M&A Technology and Venture — Shark Tank inside a Corporate?

What about innovation platforms at Daimler and the people behind it? With #venturewednesday we introduce the teams and their special role in shaping the future of mobility. This time: Tech Invest – the M&A colleagues at Daimler who are responsible for strategic startup investments.

When we report on the work we do, we often hear people say they’re familiar with tech, startups, and venture investments because they’ve been watching the TV series “Shark Tank.” They aren’t too far off the mark, but (unfortunately) there are a few differences between the TV show and Daimler’s activities.

M&A (Mergers & Acquisitions) Technology and Venture is the Daimler Group’s department that is responsible for all tech acquisitions — for example, that of Chauffeur Privé, a ride-hailing company based in France. We also handle relevant partnerships, joint ventures with a technology aspect, and all investments in startups, such as our investment in the California-based electric bus producer Proterra.

In other words, we are partly an M&A unit with a focus on tech and partly a corporate venture unit. We developed the concept for this unit and founded it about two and a half years ago. Since then, my team — which has never exceeded nine colleagues — and I have been responsible for all of the Group’s investments in startups and technology.

What does this have to do with “Shark Tank”? In principle, we run a professional process for Daimler that is similar to what the investors on the show — the “sharks” — seem to do in five minutes. In reality, the show’s actual investment process also takes place off-camera.

Identifying and analyzing investment opportunities

Together with our business units and the corresponding specialist experts, we help the Group find relevant investment and partnership opportunities. Relevant companies are those whose business models can help us reach our strategic goals, such as the further electrification of our vehicles. We have many sources for this “deal flow,” including our own network, banks, consultants, and in-house experts.

Due diligence — screening business models and business cases

After we’ve identified an interesting company, we investigate it thoroughly. We get to know the team in detail, gain a thorough understanding of the company’s business model, technology, and market opportunities, and conduct an evaluation of its financials.

Structuring and negotiating possible transactions

If a company turns out to be interesting, our task is to work out the right structure for an investment and to provide our business units with the relevant consulting. Would it make sense to acquire the company? Or should we buy a small share in the company instead? Do the company’s founders want to continue working there? These considerations make us different from many other companies and investors.

My team can make acquisitions, enter into joint ventures or do venture investments. We combine all the responsibility in the area of tech and startup topics in one unit. Many other companies make a strict distinction between an M&A team (for acquisitions and joint ventures) and a corporate venture team (for minority investments in startups). Because we combine these two functions, all the members of our unit can share their knowledge about both areas and our M&A activities can stay abreast of the latest developments in the startup scene.

Drafting and negotiating contracts

Of course, working together with the legal department to draft, review, and negotiate hundreds or even thousands of pages of contracts isn’t something for everyone. But that too is one of our main tasks, and it’s always a great feeling to finally be able to seal “one’s own” project with a signature after a long period of negotiations.

Of course we’re not the “jury” taking the final decisions for investments from Daimler. Instead, the final decisions about our projects are made by a committee at the Board of Management level — our “sharks,” so to speak. However, we’re proud of the fact that our processes are so fast and competitive, that we can keep pace with venture funds — purely financial investment companies that invest in startups — and that we are faster than many of our competitors. I was especially happy about one award we’ve received: Last year our Daimler team won the Corporate Finance award in the “Digital” category from the “Börsenzeitung” — a German daily financial newspaper.

Tech Invests portfolio and acquisition

Today our portfolio includes about thirty startups in which our investment volumes range between €1 million and more than €200 million. That’s in addition to all of our acquisitions, joint ventures, and similar arrangements with a tech aspect. You might be wondering what we mean by the term “tech.”

We basically focus on the CASE areas — Connected, Autonomous, Shared, Electric. At Daimler, we believe that these four areas will define the mobility of the future. So it’s only logical that we’re looking for investments and possibilities for further development in these areas in particular.

Diverse themes, interesting people

All of us especially enjoy the broad range of tasks that results from our job description. It’s not uncommon for us to have a morning discussion with a startup from the mobility-on-demand scene in Israel, spend midday negotiating with a battery technology company on behalf of Mercedes-Benz, and devote the evening to analyzing the business plan of a manufacturer of electric trucks.

Of course that means being in contact with interesting people, including company founders and investors outside Daimler as well as our in-house colleagues from almost every part of the Group. Our in-house customers, for whom we make investments, come from all of the Group’s business units. We can participate in many discussions and projects for changing and enhancing our products as well as our company as a whole.

People often ask us if what we do is only “playing games.” Why is a company like Daimler paying any attention to themes and startups of this kind?

We are not a financial investor. In other words, we don’t invest in young companies in order to sell them later on at a profit. Of course we want to earn money, but our main focus is on gaining access to innovations outside the Group. These innovations can be new business models or new technologies.

A good example of that is mytaxi. Initially, mytaxi was a small startup in which we bought a small number of shares. Later on, mobility on demand became increasingly important, and we acquired this company as a whole. We complemented this acquisition with the purchase of other companies such as Taxibeat in Greece and Chauffeur Privé in France. Today mytaxi is the most successful ride-hailing company in Europe and a major pillar of Daimler’s mobility strategy.

A small team with big plans

We’re proud that our small team is making a contribution to innovation at Daimler. Through our work we enable our business units, which due to their own activities often have little time to look outside the Group, to get in touch with ideas and impulses from outside our company and to make use of them for Daimler.

In order to have the speed we need as we work with startups and tech companies, we don’t get involved in any complicated discussions of hierarchies or areas of responsibility. On principle, every member of our team must be able to do everything — from analyzing business models to reviewing business plans, assessing companies, and negotiating contracts. It goes without saying that sometimes there’s a lot of pressure and that sometimes a team member might look with envy at the more “structured” workday of some of our colleagues. But the fact that we’re working at the center of change for the mobility industry and all of its challenges makes up for a lot.

Nonetheless, our job calls for a lot of conviction and commitment. If it were otherwise, our small team couldn’t accomplish all that we do every day. That’s why we feel that our team has earned the right to indulge in a game of PlayStation from time to time. We’ve completed projects in the area of e-sports, such as an investment in the SK Gaming e-sports team — yes, that too was a tech investment — but I have to admit that our own performance on the console is only average at best…

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Christian Herrmann is the Head of the M&A Technology and Venture unit at Daimler AG. His biggest private venture is not very technical — it’s his commitment to his two young daughters.