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Introduction
At New Venture Partners, our investment practice was built on working with corporations to commercialize innovations through spinouts. In these difficult economic times, corporations find it increasingly important to focus on their core businesses. As a result, many of our corporate partners have shown even greater interest in spinouts in order to maintain focus and reduce costs while retaining upside potential for long-term projects. More and more corporations are seeing the benefits of transferring their technology into the hands of trusted outside investment partners who can bring special expertise to developing these opportunities into successful independent businesses. In addition, the corporations can then buy products from a skilled, well-capitalized supplier serving a broader market rather than carrying the entire burden of product development, upgrade, and maintenance over time. When the internet/telecom bubble burst in 2000, we saw many examples of corporations electing to shed product lines they would prefer to buy rather than make. Successful companies like Celiant, a spinout of Lucent, and Azure Solutions, a spinout of British Telecom (BT), are examples. The same trend is repeating in the current market conditions. In this issue of our newsletter, you'll read how our recent investment in Texert, a spin-out from Asparity Decision Solutions, Inc., was fueled by the needs of our long-time partner BT, who was looking for an operational risk management software platform to support their Global Services business in this area. In addition, Texert CEO Curtis Holmes offers perspective from the front lines on the growing risk management sector. Finally, we're pleased to add Unilever to our list of corporate partners with whom we've collaborated on spinouts. In January, we co-invested with Unilever Ventures on MiLife, a new company dedicated to helping people achieve a healthier lifestyle, capitalizing on a growing trend in health and wellness. MiLife's innovative weight loss and physical activity management system is based upon Unilever Corporate Research's exploration of long-term weight loss and behavior-change coaching systems. Follow the link in our Spin-out Spotlight below for more about MiLife. We'll return this fall with another edition of the newsletter. Until then, we'd love to hear from you.
Content
IntroductionTrend Tracker
"Transforming Risk Management"Investment Update New & NotableSpin-out Spotlight Articles & Events About New Venture Partners
Trend Tracker
“Transforming Risk Management Through Corporate Innovation”
By T. Curtis Holmes, Jr.
CEO, Textert, Inc.
Risk management is an essential part of the value creation process for any business. The infamous sequence of events of 2008 and the subsequent financial meltdown sounded a deafening alarm that current risk management strategies are inadequate. If risk management wasn't top of mind for an executive before, it most certainly is now.
Several years ago, BT recognized a growing demand from its global customers for a governance, risk and compliance (GRC) solution. To satisfy this demand, BT commenced an evaluation process of enterprise risk management companies and ultimately selected US-based Asparity as its strategic partner to sell its GRC software as part of a larger BT-provided solution. Since Asparity's core business is providing decision support solutions for managing employee benefits, not GRC, BT was looking for a way to ensure strong focus on developing the GRC solution. Together, BT, New Venture Partners, and Asparity identified a unique three-party application of the Open Innovation model. The idea was to spin out Asparity's GRC division to form a new company, Texert that would provide BT with a well-funded and professionally managed strategic partner.
As part of managing the spin-out process, I was brought in to work with BT, Asparity, and New Venture Partners to manage the business and develop a risk management product to meet BT's requirements. At the time of spin-out, Texert had a global customer and channel partner in BT; Asparity could focus on its core business; and BT had secured a well funded strategic partner in Texert to drive its global risk management initiative. After closing the spin-out transaction, we introduced Texert to other channel partners and potential clients in key industry segments such as energy and financial services.
The financial market meltdown that has spread far beyond Wall Street and now impacts virtually every business, large and small, around the globe, has heightened the need for such risk management solutions. According to an Economist Intelligence Unit Survey released in September 2008, 27% of surveyed senior finance executives had confidence in their current methods and 18% had an effective enterprise risk management strategy in place. It is absolutely essential that we evolve our thinking, re-evaluate our processes, and continue to innovate our approach to enterprise risk management if we are to transform its effectiveness.
CEOs, CFOs, Chief Risk Officers, Business Unit Heads, Compliance Officers, and CIOs must lead the charge in elevating the importance of risk management within the organization so that it is perceived as integral to the business process and a part of everyday operations. Risk management cannot be categorized as another task, another audit, or another "tick in the box;" it is a competitive weapon in ensuring and improving business performance. As we have seen over the past several months, some companies navigated the crisis much better than others because they implemented a sophisticated risk management and early-warning detection system.
Organizations must embrace solutions that enable proactive and holistic risk management. Current technical approaches to risk management provide mostly static data that is isolated in silos or distinct business units and often is not integrated as a part of mainstream business processes. A transformed risk management strategy will incorporate innovative technology that yields a holistic view of the enterprise with the sophistication to account for the interconnectedness of risk, governance and compliance. A blend of intelligence, transparency and cooperation will be necessary for risk management to succeed in today's environment -- one where the interdependencies among global corporations are increasingly complex, regulators are exerting increased scrutiny, and financial performance is paramount.
Fortunately, the transformation already is under way. In May 2008, Standard & Poor's Ratings Services announced that it would expand its "ratings analysis of non-financial corporations to include a review of enterprise risk management." Standard & Poor states, "We expect this initiative to enhance our analysis of management generally, identify differentiated capabilities of companies to respond to adversity, and help make our ratings more forward-looking."
The events of 2008 demonstrated that when our ability to identify and manage risk is compromised, the world's eco-system is jeopardized with potentially catastrophic consequences. Improving enterprise risk management will be an enormous task in the years ahead. BT, Asparity and New Venture Partners took a valuable first step in creating Texert to tackle this timely problem. Risk is not to be feared, but rather managed and leveraged. With the right approach and technology solutions in place, the global corporate community is poised to transform yesterday's miscalculated risk into tomorrow's opportunity.
Investment Update
 | TimeSight Systems Secures $3 Million Series A Investment from New Venture Partners Read Press Release › |
 | Silicon Hive Receives $7 Million in New Funding From Intel and Current Investors Read Press Release › |
New & Notable
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– Dec. 2, 2008
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Spin-out Spotlight
MiLife
Texert 
Articles & Events
Steve Socolof.
About New Venture Partners
New Venture Partners is a global venture capital firm dedicated to corporate technology spin-outs with over $700 million under management. New Venture Partners provides a bridge between technology corporations and traditional venture capital. Through its unique, hands-on approach, the firm offers a systematic process for commercializing innovations and provides an alternative path to market for technologies that originated in corporate R&D labs and business units of global technology corporations. The New Venture Partners team has partnered with over 10 corporations to complete over 50 spin-outs from Lucent/Bell Labs, British Telecom, Philips, Unilever, Freescale, Intel, Telstra, Avago and others, and has become the benchmark for corporate spin-out venturing. Visit the website at www.nvpllc.com. For all other requests, please do not reply to this email. Instead, please contact us through our website.