However, not every collaboration is one that leads to an acquisition. This is where venture capital funding comes in. A company can set aside a certain amount of money, using it to invest into companies and technologies that are of interest.
In fact, INX International Ink Co. is doing just that, creating a $50 million venture capital fund. The goal is to make minority investments in materials science and technology start-ups that are related to the inks and coatings segment. Typical checks will range from $1 million to $3 million at first, with reserves for follow-up investments. The fund will pursue select seed and growth stage opportunities.
Shane Bertsch, VP of strategic planning and innovation for INX, said that the fund is an additional tool that will help accelerate innovation in alignment with INX’s vision and strategy.
“We are working to understand what the market needs and are developing solutions for these needs,” added Bertsch. “We feel that startups can play a key role in delivering solutions. The fund can make minority investments to help accelerate those start-ups.”
INX International CFO Bryce Kristo noted that Sakata INX has a program of its own that allows INX to cover the market.
“There are a lot of concentric goals,” said Kristo. “We haven’t invested yet, but we have done a lot of collaborative efforts in terms of licensing, some of which didn’t require investment. Our venture capital fund allows us to look at new technology faster, and to show our commitment to the most complementary start-ups.
“We have a team that goes out and scouts technologies that could be a good complement to us, and when we start to find them, we find the resources to put around them,” Kristo said. “When we go to a proof of concept, we are able to bring in experts from INX’s talented group of people.”
Among some of the areas of interest are bio-based and sustainable materials for inks and coatings technologies that enable circularity and enhance recycling, and greenhouse gas emission (GHG) and carbon footprint reduction solutions.
Digital printing is another area of focus, including direct-to-object printing and novel inkjet technologies and inks. Industrial automation and brand services are other areas of interest.
“We’re looking at sustainable and circular economy solutions – raw materials, new technologies – as well as digital print solutions, brand owner services and new ink technologies,” Bertsch said.
“Many of the solutions and investments overlap,” Bertsch said. “We’re using innovation techniques, and by having a broad-based network, we are getting access to very interesting start-ups. We are filtering and bringing forward top opportunities that align with our strategies.”
The fund is jointly run with Touchdown Ventures, the leading provider of corporate venture capital managed services. Will Geiger, director for Touchdown Ventures, said that Touchdown offers insights into where the market is heading.
“In addition to partnering with INX, many of these businesses need capital,” Geiger noted. “The investment can strengthen the relationship and add a lot of value for the start-up. We determine the investment focus areas based on what we are hearing from inside INX as well as from the market. We build relationships with entrepreneurs, co-investors, go to conferences and industry events, and determine deal quality and fit through diligence.”
While INX hasn’t announced any funding yet, Bertsch said that INX’s leadership is looking ahead to finding new opportunities.
“It’s a new fund and we’ve hit the ground running,” Bertsch concluded. “We expect to have news to report within the next 12 months.”
Kristo pointed out that opening a venture capital fund is a shift in how INX is getting new ventures.
“In the past, someone would come to us and we’d pursue that, but what we should be targeting are the people out there who can solve problems,” Kristo added. “In the past it was what people we knew or who came knocking on our door, maybe get into an M&A talk. But we spend a lot of money doing that. We decided to target the opportunities and communicate with innovators. Touchdown can then go out and introduce us to them. This allows us to determine what we want to innovate to. This allows us to stay focused on what we want to innovate to. This will allow us to be a lot more successful.”