SAP Invests $1 Billion in Tech Startups

By Sarah Oliver,  
Money & Investing Writer

SAP (NYSE:SAP), short for its German name which translate to Systems Applications and Products, is the world’s largest inter-enterprise software company and also one of the largest independent software suppliers. Not only does this company provide software for huge names, like Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM), but over the last 20 years they have taken a step in a different direction, increasing the use of their Sapphire Ventures program.

Sapphire Ventures was started in 1996 and since then has partnered with over 130 companies worldwide. Sapphire Ventures takes pride in the way that they do business with startup companies. Companies that choose to partner with Sapphire Ventures do so because they know that they will be treated as more than a means to increase SAP revenue.

The pride that they have in their program is clear, as stated on their website sapphireventures.com, “As a limited partner, we bring more than money to the table. We proactively leverage our expertise, global network and dedicated market development programs to deliver distinctive value to you and your portfolio companies.” Some may wonder what the motivation behind these risky investments is. However, without risk there would be no reward.

As a society today we love to hear about new forms of social media, new applications, and new programs that make things far more efficient for us as a whole. But how is it that these programs and applications make it big? It would not be without the help of global tech startup programs like SAP’s Sapphire Ventures. In recent news, the company has spent $1 billion in startups to early stage venture firms. More specifically, $700 million into startups and $300 million into stakes in venture firms all over the world. Managing director Nino Marakovic discusses just how difficult it is to choose who to invest in stating, “The big plays aren’t always obvious in the beginning” and that “True results take time.”

One of the company’s most recent investments is the social networking cite LinkedIn, which has become one of the most used applications when it comes to professional networking and job searching. This is only one example of smart investments made by Sapphire Ventures in recent years.

Some may wonder what the logistics behind these investments are. Why would a company which produces its own technology and programs want to help other businesses who are in the same market? The answer is simple. Rather than waiting for these programs to make it big on their own time, Sapphire Ventures sees the upside in getting their foot in the door first.

Not only does SAP provide cash to help with startups, it also acts as early customers for these startup companies, and introduce them to the company’s other partners. By continuously building their network, the company is able to get a first look at promising investments other investors miss out on.

Sapphire Ventures is focused on the promising returns that are expected to come from these portfolio companies. By partnering with them from the early stages, they are able to eliminate these companies as a future form of competition, and instead celebrate in their future success.

A version of this article appeared in the Tuesday, September 27th print edition.

Contact Sarah at
sarah.oliver@student.shu.edu

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