Elevator Pitch: Claudia Fan Munce of IBM Venture Capital

Claudia Fan Munce heads IBM’s Venture Capital Group, which she runs from Big Blue’s venerable Almaden Research Center in San Jose. IBM scientists stationed there over the decades have pioneered such technologies as the disk drive and the distributed relational database.

But Munce admits it bugs her that after such a long legacy, many in the valley still consider New York-based IBM something of an outsider. In this week’s Elevator Pitch, she talks about the company’s new trove of money for startups built on Watson, the IBM “cognitive computing” system best known for defeating two human champions on “Jeopardy!”

Q: HOW’D YOU GET INTO THIS RACKET?

A: My background is in electrical engineering and computer science. My IBM career started in 1985 here in Silicon Valley, working at IBM’s Research Division. After holding a variety of different technical and business leadership positions, I became a founding member of the IBM Venture Capital Group in 2000 and became managing director in 2004. This work has been particularly exciting to me as I am Chinese and grew up in Brazil, and in recent years IBM’s venture group (and Silicon Valley venture investing) has expanded to those countries and many other regions such as Russia and Africa.

Q: WHAT DO YOU LIKE ABOUT VC?

A:  What I find most rewarding about working in the corporate venture capital space is cultivating and building strategic relationships with VC firms and their portfolio companies to bring new technology to market, grow opportunities in new markets and build an ecosystem that fosters innovation. IBM VC Group professionals work with nearly 300 VC firms around the globe. Through these relationships, IBM has accelerated more than 1,500 startups in the last four years and helped startup partners raise more than $115 million in VC/angel funding.

When you combine innovation from the startup community with the technology, scale and resources of IBM, entrepreneurs are able to quickly bring new solutions to market, while forming valuable partnerships with IBM and its ecosystem of VC’s, clients and developers.

Q: WHAT KINDS OF PITCHES ARE YOU LOOKING FOR NOW?

A:  We’re not looking to get a financial return through equity, but we are looking for top-line revenue growth through innovative partnerships with startups and VCs. Those partnerships are a key factor in our ability to build and strengthen new markets such as cognitive computing, cloud, mobile and big data and analytics. For instance, to meet growing client demands in today’s data intensive industries, IBM has established the world’s deepest portfolio of big data R&D, solutions and software. Additionally, no one is better positioned than IBM to help clients transform with cloud. IBM has spent the last few years assembling the right talent, acquisitions and R&D to build the most comprehensive cloud portfolio in the industry.

Another way IBM supports startups is through IBM SmartCamps, events held around the globe to empower startups to tackle the world’s greatest challenges in areas such as healthcare, water management and energy efficiency. Over the last three years, I’ve hosted SmartCamps in Boston, Silicon Valley, Nairobi, Shanghai, Dublin, Sao Paulo and Sydney. Even though I’ve heard hundreds of entrepreneurs pitch their business, it never gets boring. There is always a new idea that could change the way we live and do business.

Q: WHAT’S THE BIGGEST MISTAKE ENTREPRENEURS MAKE?

A: One of the biggest is underestimating the value of being part of an ecosystem and building strategic partnerships. Starting a business is no easy task. According to even the most optimistic studies, three out of every four startups fail. To combat these odds, entrepreneurs must search for new ways to gain a competitive edge, network with the right people and, most importantly, raise funds. An ecosystem of partners can often help entrepreneurs tackle some of their greatest challenges.

Q: WHAT’S THE NEXT BIG THING GOING TO BE?

A: Being an IBMer working in Silicon Valley since 1985 has exposed me to pretty much every technology and business trend in the last 30 years — from the PC and the birth of the Internet, to today’s big data deluge, the great cloud migration and the recent emergence of cognitive computing. Watching technology evolve to meet today’s business and societal challenges has been both fascinating and exciting.

I think the next big trend is going to be the continued expansion and application of cloud, mobile, big data and analytics and cognitive computing technology to new business ventures. This year’s IBM SmartCamp finalists — such as Fresno based OnFarm, which provides analytics and insights on key agriculture fundamentals to help farmers make better decisions about their crops — are a perfect example of this trend.

Q: YOU RECENTLY ANNOUNCED A $100 MILLION FUND FOR “WATSON POWERED STARTUPS.” WHAT EXACTLY DOES THAT MEAN? 

A: In November, IBM announced it would make Watson available as a development platform in the cloud, to enable a worldwide community of software providers to build a new generation of apps infused with Watson’s cognitive computing intelligence. The move aims to spur innovation and fuel a new ecosystem of application providers from a variety of industries and of all sizes, ranging from start-ups to established players.

Recently, IBM announced it will establish the IBM Watson Group, a new business unit dedicated to the development and commercialization of cloud-delivered cognitive innovations. IBM will invest more than $1 billion into the Watson Group, and this will include $100 million available for venture investments to syndicate with our VC partners and support IBM’s ecosystem. This funding is for the seeding and growth of Watson powered apps and businesses, including dedicated support to the entrepreneur and venture communities through workshops and seminars, as well as networking opportunities. As always, IBM’s venture capital group will continue to help startups through mentorship, partnership, matchmaking and free access to IBM technology rather than just direct funding — a unique approach compared to other large organizations.

Watson’s groundbreaking cognitive computing platform represents a new era of computing based on its ability to interact in natural language, process vast amounts of disparate data and learn from each interaction. Watson is an ultimate adviser in its ability to sift through and understand massive amounts of big data at unprecedented speeds. So much has happened since Watson appeared on Jeopardy — we’ve introduced a steady cadence of cloud delivered Watson products for industries such as healthcare, financial services and retail. The demand for Watson’s unmatched cognitive intelligence has grown rapidly, and I predict it will continue growing.

Q: IBM IS ONE OF RELATIVELY FEW U.S. TECH GIANTS THAT AREN’T BASED IN SILICON VALLEY. HOW DOES BIG BLUE VIEW THE VALLEY?

A: IBM has deep roots in the region and continues to have a presence here. Many key IBM inventions were born in IBM’s local facilities, from the disk drive to the cognitive computing chips researchers are building today at our Almaden research lab. Silicon Valley has been and continues to be an important part of IBM’s strategy, especially IBM’s Corporate Venture Capital strategy. 

 

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