Honeywell Investment Director Giancarlo Savini is changing the game for founder-investor relations with pre-agreed investment contracts
The investor-founder relationship is changing. As VC funds flood into cleantech in never before seen numbers, founders and investors have to navigate a new dynamic where they build constructive relationships to steer the company forwards and mitigate startup risks.
But many VCs and founders don’t have the framework for implementing a partnership agreement beyond funds, this creates uncertain expectations that set both sides up to have hopes dashed. It’s a wooly marriage where strategic support may be promised or expected, but fail to materialise.
Giancarlo Savini cleantech Investment Director at Honeywell is out to change that.
He’s smoothing the way for investor-founder relationships with pre-agreement partnership contracts that clearly map out all terms of the relationship – including sales and/or product development support.
“It’s a new theme that’s emerging. A lot of VCs are moving in that direction, developing partnerships and business development teams to tangibly help their portfolio companies. Even Sequoia Capital started to move in a similar direction. They created a team called customer partnership,” says Giancarlo.
“The most successful VCs are now deciding they want to further develop customer partnership and help their portfolio companies establishing stronger relationships with their clients – that’s kind of telling as to how important it is.”
An engineer by background, Giancarlo first moved into green techpreneurship 8 years ago: “It’s one of the few sectors where you can work with technology, at the same time you can have an actual impact for society. I compare my job to being a doctor – they also work with technology, but they can immediately see the impact of what they’re doing.”
He now leads the sustainability Corporate Venture Capital vehicle of Honeywell PMT with a focus on Green Hydrogen, Biofuels, Energy Storage & Plastic Circularity. Giancarlo recently presented Honeywell’s investment in biofuel at a White House event on Sustainable Aviation.
When he isn’t busy making waves in the cleantech investment space, he’s out chasing waves – relieving the pressures of the job with kitesurfing:
“I’m extremely active with sports – I like everything that is related to water and surfing. It’s really connecting to two elements at the same time, – you can feel the wind, at the same time you’re in the water. Those are my two favourite elements.”
How do your pre-agreement investment contracts work?
Our approach is to pre-agree as much as possible partnerships contracts to really help the entrepreneur. This includes licensing agreements we set up for years to come.
Through a pre-agreed partnership framework, the CEO has a clear idea of exactly what to expect in the partnership we are offering.
We co-create a partnership where we clearly frame, for next 10 years, exactly how our partnerships can support their specific company’s growth – what support we will offer them beyond sole investment.
We’re not here to learn and take information– we can work with a startup to complement their strategies and improve their speed to market.
So do you see this as something which could be adopted across the industry to transform that investor-founder relationship?
I don’t think there is any silver bullet.
The reason why it often doesn’t happen is because it’s a lot of hard work and in the early stages of investments, maybe when it’s yet not clear what the real potential of the relationship is.
Another reason why pre-agreed partnership contracts don’t happen often during the investment is that a lot of corporations aren’t structured that way. The typical VC is an investment professional, but they may not have a lot of skills to bridge the gaps to help companies implement partnerships and business relations.
What does the ideal investor-founder relationship look like to you?
The relationship may vary depending on the company sector. But for that ideal partnership, it’s important to map the interoperability of a startup and then try to compliment those with the right partner.
The investor needs to spend some time understanding the skills and capabilities of startups. It’s quite simple because these companies have 4 –15 employees, you can see where they are experienced and where they need some help to match their skill panel.
For example, if the venture and the startup are synced in product development, maybe what the corporation can do is to establish a relationship with them to help them develop the technology.
Who do you want to receive a pitch from?
What we want to do is to partner where we can provide abilities or the commercialization platform. We’re looking to invest in four areas.
● Energy storage software – typically, it’s about software for battery management systems or power plants.
● On the hardware side, it’s everything that can enable more long-term energy duration
● Plastic circularity – to improve plastic recycling so it works better, enabling chemical recycling.
● Green hydrogen – specifically for industrial applications and we want to contribute here with the existing facilities that we already have.
Can you describe the best pitch you’ve seen?
The best pitch is extremely well-rounded in all aspects.
The leadership team has the right mix between enabling technology and domain expertise. The team have worked together in the past. Their go-to market strategy is not only about having a great technology or business model but they have also carefully thought about all intermediate steps. They are extremely detailed and sound on unit economics. They have validated the numbers with other corporations and other subject matter experts who are knowledgeable about their market.
When company is sharing their total addressable – it’s not only about that but is also about how to find their first early adopters and use that to find cover even more customers. Like Amazon decided to start with books. We all know that the best companies know where their market entries are.
When all these statements are validated by the market and by subject matter experts. You can see it from the level of confidence and you can feel the difference.
What are the most common mistakes you see when startups pitch?
I’m humbled when I see the efforts of the founders – I’m not even sure if I could do any better.
But one typical mistake I see in sustainability is to try to please too many customers and avoid focussing in to what really makes the difference. A lot of companies are running around with different value propositions in different segments in the market, and that is wasting a lot of effort.
You need to pick where you want to target and develop your strengths. It’s still a maturing market – but by trying to target lots of clients at the same time companies are diluting their strengths. Once you break into the market, you can expand into a different segment.
How many pitches do you receive in a year?
We receive roughly 150–280 pitches. We invest in 3 companies every year. We don’t want to invest in much more than that because these investments are a combination of two other compatible frameworks where we develop an agreement as a partner – it’s not only about one investment term.
…….If you could teleport yourself into the future…what would you be doing?
I would like to continue to do what I’m doing – helping founders – it’s really one of the best jobs ever. You’re dealing with motivated people and they’re doing it because they believe in it. They’re extremely smart.
Apart from the usual corporate journey, interacting with those people is what motivates me.
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