Scaling Venture Clienting With REHAU New Ventures Ronja Stoffregen

Fred Schonenberg
Hello everyone and welcome to the VentureFuel Visionaries podcast. I'm your host, Fred Schonenberg. I am so excited today to have Ronja Stoffregen joining us. She is the Director of Corporate Venturing at REHAU New Ventures. 

Ronja and I first met a couple of years back at an innovation conference and we're both speaking and I stayed after my session and was listening and Ronja used the phrase venture clienting. And I'd never heard that phrase said that way. And it's all about large organizations working with startups to drive innovation and commercial results. And I was like, that's what I've been doing for 10 years. So I immediately was like, Ronja, we have to talk more. And I'm excited that I coerced her to join us today to kind of unpack what that is, how it works with CVC and the other ways of buy, build, partner. 

A little bit of background, just to kind of embarrass you, Ronja, I'll give you all your… some of your highlights here. So she's the Director of Corporate Venturing at REHAU New Ventures. She works in deep tech through venture clienting, helping large industrial companies partner with startups in a way that drives tangible business impact, both short and long-term. She recently transitioned from a 150 year old state-owned logistics provider to this family owned industrial company, giving her a very unique perspective on what changes when you shift environments and how innovation programs actually can get built and scale.

In this conversation, we're going to dig into a few things. The practical tools she uses, how she spins up lean venture client units with a limited budget and headcount, how she chooses which strategic bet to make and how she's able to move quickly inside of large organizations. Everything from building six pilots within six months to figuring out how to make that a repeatable framework. 

And so we're going to look at what she thinks is possible in the future, how AI is shaping her work and what large companies can learn from what she is doing. So Ronja, thank you so much for joining us today.

Ronja Stoffregen
Thank you so much for having me. I was very much looking forward to having another good discussion with you, Fred.

Fred Schonenberg
So I would love to get your thoughts. I mentioned venture clienting early on. And so for any leaders that are listening today that don't know what that phrase is, could you maybe introduce it and how it's different from maybe more traditional corporate venture capital or other innovation programs?

Ronja Stoffregen
Yeah, I'd love to. Corporate venturing tools, so far I would put them in three different boxes. So we have the original venture capital, which then further developed into corporate venture capital. We have venture building which has more and more development into venture studios and entrepreneurship and entrepreneur in residence. And there were a whole new guidelines and principles around venture building. And then we have the third pillar, which is venture clienting. 

And as the term says it, it's basically we as a corporation want to become a client of a venture. So ultimately we don't want to have any equity. We don't want to do a joint venture. We just want to use their software solutions so that we become a customer and implement it so that we can be at the far front of technology without having all of the resources in-house.

Fred Schonenberg
So why would a large organization do this? How is this different from let's say procurement or working with any other customer?

Ronja Stoffregen
For sure. Sometimes I do say we're like a fancy procurement division, but then we're actually not because of procurement, ultimately you're intending to decide for one supplier and then you go for it and negotiate the toughest terms to make the best deal for you. But I think that obviously there's a good reason for continuing doing that. 

But when you collaborate with startups and that's why I'm saying collaborating, because we're partnering with them, there's so much that the startup doesn't know yet from a technical side. We don't know yet from use cases. And oftentimes when the startup is just in their beginner shoes, we don't want to negotiate to the last euro or dollar because we would be afraid that they would become insolvent if we just negotiate so hard and then we never can finish a part. And the most important part is that we're not just buying a solution and implementing it. We actually try it out first. So what I mean by that is that we do pilots and venture client things. 

So if I can just guide you through the process really quickly. Ultimately, we start together with our we all have multiple subgroups and with a focus, obviously. And then we always start with the strategic field. So where and how do we want to save money? Where's the biggest efficiency gains to hold? What is our AI and digital strategy? Then from there, we define pain points. And from those pain points, we define use cases that have potential to be optimized with AI and Gen AI. And then ultimately, we start with the venture unit. 

We then start with the scouting that follows a long list of startups. We discuss it and evaluate it with our colleagues to have a short list. And out of this short list, we finally then come up with one or two startups where we actually want to start a pilot. And with this pilot, then we have clear KPIs. Only when those KPIs are clear and set in stone, we are eager to start a pilot, test out the solution, think, does it make sense to continue, you know, or like, does it match our demands from a technical, from a business perspective? And only then do we actually sign those one or two years contracts.

And the difference here is that in so many organizations, you will have those big software tech bought in with lots of customized, lots of like R&D, and then you have like 18 months of a timeline and lots of budgets that are never being met. And ultimately, you have a product that nobody really wants to use. Or let's say just like a small fraction of the people are using it to 100% because so much is still not tailored to their demands.

Yeah, and this is where we with the venture client team want to close this gap and only invest in startups or in technologies that are relevant for us that actually meet the demands. And that comes usually at a fraction of cost, because it's not so much customized, because it's hopefully a standardized solution.

Fred Schonenberg
Very interesting. Is there value to the larger organization here? I've always found to be very clear what the value is to the startup. But on the larger company side, some have pushed back over the years to me and said, Well, why don't we just wait till the startup has figured it out and become a big enough vendor that we can just send them to procurement? Why are we going to be guinea pigs to whatever the new solution is?

Ronja Stoffregen
I think that’s a fair question and I think every corporate should evaluate that on their own terms. However, at least for us at REHAU, there are certain use cases where you should where you just don't want to… you want to catch the train and you want to not miss out on a certain technology. I think it all goes down to the question of make or buy. 

And surely with a shift of competences, we see that, you know, the leading tech people, the leading entrepreneurial minded people are usually not viewed for an entrepreneur, like for a career in a corporate. So they are outside, they're building those startups, they're building those tactics. And so we must get access to those competences and skills and methods, and so we must simply buy the solutions and not make it ourselves.

I think this is where it all comes down to that. I think the time of making everything ourselves and the custom size is done and we must find ways to implement startups. And if it doesn't work out, then also the costs are not that high, because we can simply just terminate the contract and be done and find something new that is better for us.

Fred Schonenberg
I agree 100% with you that this era of sort of we're going to build everything ourselves has passed. I would say that there is some legacy thinking from that era, called it before, like “not invented here syndrome.” And it's been prevalent in R&D or engineering groups, right, that are used to building and have a lot of pride in what they have built, or how they become a big company, all of which is totally justified. 

How do you help them get past that hurdle of, hey, all this, all of a sudden, you need to think a little differently. And there might be solutions out there that could benefit you, by the way, I think it's additive to internal R&D. But I'm curious how you navigate that within the organizations that you've worked.

Ronja Stoffregen
To be honest, I think there are no good arguments. The best way to get it done is by showing results. So oftentimes, especially in the beginning, it's hard if you don't have this big portfolio of startups, and you know, startups implemented and where you have all these the track record really inside your organization. 

But I think especially now in the beginning, like it's been now roughly like a quick, like a short year, I sometimes lay low with the discussions and argumentations, because it would just go nowhere. But rather focus on those that are eager to drive change, eager to see the pain points. And I must say, I have a bunch of colleagues, like they're really everywhere asking for doing startup scouting, or collaborating with startups, we have more than 70 pain points collected already. And we're doing like 10 scoutings at the moment, we have six pilots already, like started and two solutions implemented at this point. 

So it is, and I really feel there comes an ease now talking to everybody, because it starts out after nine months, the result starts to show. Yeah, as we all know, results are bigger than any words. So I'll just stick to that and then it's just becoming easier. And I do also want to make this really clear, if you cannot convince everybody, there will always be people who don't want to get it done, who want to have things the way they are. But I also learned in the first year, that if you can, you must decide either you want to change or you want to make friends. 

And I'm really on that side that I always want to have a great environment with great people around me and create impact while having fun. But at the same time, we must change things. And sometimes, yeah, sometimes it's one way or the other. 

Fred Schonenberg
Could not agree more. So let me ask you this. A lot of the work you're doing is within deep tech inside of industrial companies. What changes when the technologies and startups you're thinking about are complex, maybe capital intensive, or the least embedded in physical operations? I think a lot of people go, okay, software, get it, we can try out the thing. If it works, great. If not, we turn it off. Once you get into the industrial side of things, how does all this change?

Ronja Stoffregen
It changes just from the very first look at it, because all of a sudden, the founding team, the cap table, their financing, everything becomes a little bit more critical, because you don't want to invest your resources and time and getting access to a plant, if you're not really sure that this is going to work out. So I mean, obviously, also the sales cycle takes longer.

But I think, for me, at least, I find it way more rewarding doing things right at the heart of our operations for REHAU, rather than, right now, we're doing stuff in marketing and legal, and procurement, and I enjoy this, because we have cookwins there. And again, we can show the results. But whenever we get to work with plant managers with demand forecasts, which is one of the pilots we're doing right now, or with, like everything where it's actually around the production, where, oftentimes, it comes down to networking capital, where it comes down to enhancing productions. That's where my heart starts to be because that's where we really create lasting impact for the organization.

Fred Schonenberg
So one of the things we've talked about a few times here is sort of impact or results. And I loved when we're talking about not invented here syndrome, the idea of like, okay, let me go with the people that are excited about this, prove it out, and then bring it back to maybe some of the doubters that are there. I'm curious if you have any examples of moving this from the startup petting zoo, right, the innovation theater idea to some tangible results in the venture client team that you're able to kind of talk to, to show the impact of this.

Ronja Stoffregen
I mean, again, as we're just being around, not even a year, I don't have this big portfolio, as I used to have a DB shanker, where we did like 160 pilots, 55 for implementation. However, I'm proud to share that we have two implemented solutions that I'm quite eager to talk about, of course, both are gen AI. So let me start with the first one.

So, ChatGPT had its go live at the end of 2023. So, oh, sorry, 2022 was the go live. And so up until this day, nobody at all had an official license to use the large language model. And so it was also for our CEO needs Wagner, who was his grandfather who founded a house. We have the biggest backing we can have here. And he was like, how is this possible, like people and our colleagues and our employees, of course, use their private attributes, because technology is available, and people want to, like, leverage on this technology.

And so one of the very, very first tasks we did was implement a solution where we not only have access to chat, GPT, but actually to all of the leading large language models. And here we did a perfectly venture clienting method by benchmarking three different suppliers. And ultimately, the final selection went to LangDoc, a startup founded in Berlin. And what they do is basically an aggregation platform for the leading large language models. 

So we are right now so we did the benchmarking from October to December, we implemented it in January. As of today, we're pre launching, because we still have to do a little bit of implementations and training and what else in the background. But we already have 140 people on the platform, who get to use not only tech to be but the other tools on a daily basis, they can start building agents. And so it's kind of hard to calculate the business case when it comes to Okay, how much more efficient am I when a large language model helps me, but I think it's just sure that we all need this tool. 

And now it's even more exciting, because the number one rule was that we want to mitigate the risk of putting all this classified data into the tool on a private account. So checkmark on this one. Then the other goal is that now we can also build agents, we can build assistance, we can build workflows. So what we do right now is like several or like unlimited workshops with our colleagues to collect those use cases, what and where is possible to solve with AI. And I think we're going to be busy until the cows come home, because ultimately, it's just going to be a never ending story because this is something important here. 

Because I'll say my previous role in the venture client thing, we didn't have this one Swiss knife that would be able to solve so many problems. But now we have this one tool with which we can do so much automation from knowledge management like mail automation, to sharing inboxes to tickets in systems to automation in market screening. So there's so much that before would solve one single startup. And now we can also with this one solution. So yeah, I mean, let's touch base again in six months or 12 months time, because I'm quite excited about this.

And I'm, yeah, I'm quite eager. Like right now, we're building an AI Academy so that people learn how to prompt how to know which language language model is best to use when, how to build an agent like what is where's AI going, like is a I gonna kill my job. Like all these things that are relevant right now, because I think the most important factor here is that we're not just by the license, but we actually have a high adoption. And that's going to be the next challenge to be measured out.

So yeah, you can tell I've been in this topic, like, every day, all day, every day, so I can talk for hours, but it is really important. I think this is especially true when we talk about industrial companies like real is now like it was founded in 1948. And now we're in the AI transformation where we can implement such an amazing tool, which leverages efficiencies, automations, and ultimately cost savings on so many levels. And yeah, it's an exciting time to do it right now.

Fred Schonenberg
It is interesting to see how fast everything is moving on that side. We run Comcast's AI program and we're year three, I believe, of just AI for the enterprise, right? And it's different. It's venture clienting, essentially, but it's multiple cohorts per year, sourcing business unit challenges, same idea. And it is just amazing how fast the tech is jumping and the use cases and the solutions and the efficiencies. And it'll be interesting to see when AI jumps from efficiency to growth, because that's sort of the promise of the generative part of it, which is starting to come true, which is really cool. 

I'm curious, one of the things that we've seen and have talked a little bit about on the show is this idea of the pilot to scale up the challenge. And I had a client once say, we're the first to pilot and the last to scale. And I always thought that was like such an interesting challenge for us to think about, because at the end of the day, you don't just want to run pilots, right? You want it to have a meaningful impact on the business. So I'm curious if you have any best practices or operational frameworks, tools that you've used that you've found the most effective in turning pilots into something that has a scaled impact.

Ronja Stoffregen
Two things quickly. First of all, you don't want every pilot to be scaled and implemented. That's the exact reason why you are a pilot. So if you would have 100% conversion rate from pilots to scale, then you, you know, you wouldn't do your venture client right, because then obviously, then you're just the procurement, you know, then, then you're just buying in those solutions. 

But I think my go to number one rule here is to have clear KPIs before you start the pilot. Because obviously, whenever the pilot is finished, people are starting to talk about budgets. Again, this is everybody's favorite topic. And you want to ensure that a pilot was not being done just for the sake of the pilot. I don't want to entertain anybody, especially if the pilot was sponsored from our end. So to me, it's most important to have clear KPIs right at the beginning. 

And then if we meet those KPIs, or even exceed them, I think we have from the very day one, we have a clear, like decision framework, what we do when I mean, if it if we don't meet the KPIs, obviously, there's no reason to continue. But if we all meet them, the startup is meeting them, then I think it's, there's only one way. And then we should, unless there's some serious budget cost cutting for whatever reason, then obviously, we must read and reevaluate. But going straightforward, I think it's also only fair for the startup to put in the work. If the KPIs are being met, we then continue the collaboration.

Fred Schonenberg
You mentioned launching six pilots in six months, I'm curious what organizational conditions or maybe its decision discipline allowed you to move that quickly? Because I know a number of folks that have spun up similar initiatives, and it usually takes quite a while to get it going. So I'm just curious how you were able to kind of hit the ground running so quickly. And what made that difference?

Ronja Stoffregen
Nitz Wagner was putting this into place at the exact perfect time because New Ventures was founded five years ago, and initially had a venture capital and venture building scope. And so it was right at the time similar to, let's just say how the general market decided on sizing down on venture building, and this also affected New Ventures. It was right that time that he said, okay, for the last four years, we've been more telling away from the group, like trying to do our very own thing. Now we want to move closer to the organization again. 

And so, ultimately, Nitz and I for six months were in stealth mode, really, to talk to the CEOs, talk to the supervisory boards and see that actually it doesn't make sense to build a venture client unit. So, when he first asked me, hey, why should we do it? I said, I don't know. I don't know if you guys are ready for it, if the technological readiness is there is the culture is the culture there. And so for the first month, we did, like strategic workshops with the CEOs to understand the strategic fields. And if they're eager to solve some of their pain points with startups, and yeah, we only saw positive feedback and curiosity and the eagerness to change and the eagerness to try and adopt new ways of getting things done. And so when we officially launched, then yeah, we already had basically done our homework in the sense that strategic fields were there. 

And in the very first month, we already did the first scoutings, so I don't want to say that everything I think is still sometimes like legal, we did a pain point workshop in November. And just this week, we decided to start to pilot. And so it still sometimes can take up to four or five months from pain point workshops to scoutings to shortlist to reaching out to startups to do pilots. So I think six months is very natural here, too. But we've just been well prepared.

Fred Schonenberg
I love it. I'm curious about the new ventures framework, and you mentioned this up front, but the venture building venture capital and venture client team, how do you see those working together? Does that become a pipeline to ventures? Because I know a lot of groups that have a CVC and are not thinking about a venture client team, it always kind of surprises me, it feels like they're very complimentary.

Ronja Stoffregen
They add to me 100% complimentary. And to be honest, especially with venture capital, like getting a bloody nose over the last few years, especially corporate venture capital. I see that venture client team, it's early, like it's short term, low risk, it's just incremental innovation on product and service innovation. However, it's also filling the pipeline for corporate venture capital. Out of the startups we're collaborating with, two already had shown interest in talking about investments. And I said, this is great, let's finalize the pilot.

And then we can talk about whether it makes sense for both sides, right? But the venture client team is ultimately the most beautiful operational diligence. Because usually, when you only do corporate venture capital, obviously, you just take a look at the tech and the financial diligence, but you don't ever get to experience the product or the people or get to know their working ethics, etc. And so venture clienting is beautiful in that sense that you actually get to know it.

And you have to make sense for both sides for us to be on the cap table and vice versa, then, yeah, let's discuss it, right. But we would not just invest and then be like, okay, can we implement it now somewhere in the organization, it would always be number one, the venture client team, and then potential investments, if it's equal for both sides. But then also, venture building that real new ventures have the capabilities and also the experience in this. 

Also, we have to run with ventures, Live Lake and Aztec that are still doing beautifully in their operations. It's cool that we have this diverse portfolio of ventures, but then also of competencies and the team. So yeah, it's our mandate to show what else can be done. And I think, yeah, you get to do that. So that's cool.

Fred Schonenberg
I love it. I'm curious if you have any advice for another large enterprise that might be listening, thinking about this. And they're obviously always thinking about the next quarter, their results, why venture capital or venture client team, and then do you have any, like, tangible advice for how to get started?

Ronja Stoffregen
Thank you for the question. To be honest, especially in Europe, I've been talking to lots of board directors who always give me a ring to exactly answer this question. So happy to do it here on the speakerphone. Ultimately, you implement a venture client team in order to increase efficiencies and save costs. That's the number one intention with the venture client team.

Then on top of that, it also has all of these other upsides when it comes to collaborating, like cross functions and, yeah, building a new software that you shouldn't make by yourself. So yeah, this is the number one. And then how do you get started with your other questions? To be honest, like this time, also, we didn't buy an innovative operating tool, we just got started.

Obviously, you work with Microsoft as most of the industrial companies, and you can easily get started with defined strategic fields, collect pain points, do a desk research scouting, and then, talk to the startups. And yeah, I think especially when you get started, start with the easy ones, like start with, like, look at your organization and see where and how you can easily have a quick way. And oftentimes, those can be found like in sales, customer requests, or sales materials, or everything around, yeah, where you can enhance the customer experience with just easy twerks.

And as you said, hit the ground running, and you kind of leverage a little bit of weight on your shoulders, then you can start tackling those bigger topics that, yeah, some other people have tried before, and maybe was a little bit more tough. 

Fred Schonenberg
I love it. So at the end of the show, we often do something called rapid fire, which is where I throw a bunch of questions at you really quickly. And you give me your sort of gut instinct reaction and in a sentence or so. So are you ready?

Ronja Stoffregen
Born ready. 

Fred Schonenberg
I love it. I love it. Okay. What is the most common mistake in corporate startup collaborations? 

Ronja Stoffregen
Okay, this was tougher than I thought. The most common mistake is expectation management and communication.

Fred Schonenberg
On both sides? 

Ronja Stoffregen
Yep. 

Fred Schonenberg
Well, okay. What's one metric every venture client unit should be tracking?

Ronja Stoffregen
Number of pain points solved. Two years ago, I would have said the number of pilots or the number of money saved. But now I'm talking about the number of pain points solved.

Fred Schonenberg
I love it. Pilot fast or validate slow?

Ronja Stoffregen
Well, obviously, pilot fast. That was a trick question.

Fred Schonenberg
What's the biggest hidden blocker to scaling up? You have a successful pilot. What's the blocker that people don't think about for the next step?

Ronja Stoffregen
Uh, the first step is usually data quality. With beautiful software and beautiful data, you can do beautiful results. But oftentimes, data is not that beautiful. Yep, point.

Fred Schonenberg
AI impact on the industrials out there. Do you think it's hype? Or do you think this is a step change?

Ronja Stoffregen
I think the most critical factor here is to understand which tools actually are friend or foe. So some of the tools are just a fancy interface, and others truly are embedded with data, and then they truly help us, but others are just a hype. 

Fred Schonenberg
Yeah. I don't know if I like this question after the Olympics, but who do you think is doing venture clienting better, Europe or the United States?

Ronja Stoffregen
I love this one, because, to be honest, shout out to you guys, because I don't think the US needs venture clienting as much as the Europeans, simply because the US companies tend to be more open minded to collaborate with startups in the first instant. And I feel like in Europe, you sometimes need to have this backing from somebody who helps with the transition. So what I just, I know this is over a sentence, but ultimately, I think the only, like, yeah, help I would give out to private equities and venture capitalists in the US is like, reach out to the venture clienting teams, because they will help you to position your portfolio from really well. That's the only thing that I would give out as advice. But in a company itself, I don't think Americans are like, resistant to work with startups.

Fred Schonenberg
Interesting. If you could change one thing about corporate innovation overnight, what would it be?

Ronja Stoffregen
It would be the reputation. It is changing. Yet, you see that because more and more, more senior people are joining forces and innovation teams. But somehow, people still see it as a nice to have and not as a capability that is a must have.

Fred Schonenberg
Very interesting. All right. Well, I want to thank you for taking the time to share all your insights with us today. It's been awesome. Is there any last thought you want to leave our audience with? Is there anything we didn't talk about that we should end on here?

Ronja Stoffregen
There's so much, but I want to shoot back and ask you a question, Fred. From the US perspective, also looking at venture clienting, you said, you've been doing this actually all your life. So what do you think has changed over the last? Yeah, let's just say three to four years.

Fred Schonenberg
Yeah, it feels like all my life, but it's only been like 10 years of this. I would say, what's interesting is that early on, most companies, large companies didn't understand why you would work with a startup. It just seemed very foreign. A few of them got it. And they spun up what accelerators, but very much for the press of doing it. They wanted to seem cool to the market, they wanted to seem cool to their employees. But the idea of it scaling was sort of like it wasn't core to the business. It was more of a marketing exercise. 

Those have very much gone out of favor. It is now, can this solve real business challenges? And so I think that's been a big evolution. But I think there is this tension currently of how do we do this the right way? Is it MNA? Is it corporate venture capital? I don't think the phrase venture clienteering is very prevalent in the US, but the idea of running pilots is certainly there. Then there's definitely this feeling of excitement about the idea of venture building until they understand what it is. 

And then they go, wait a second. No, no, no, no. Like we don't, we don't want to give up control. Like we want, we want to do the thing, but we want to use your team to do it. Or they don't understand the venture exit part. They want to be able to acquire it. So I think some of that is just like, there's this strange evolution of, I think more companies are seeing the value of this, but they drifted over into either CBC or, or corporate building and are just now starting to realize the value of, of venture clienteering.

And so I think, I think that's been an evolution. And now they're going through the challenge of, do we, do we do this ourselves? Do we partner with somebody? What type of staff do we dedicate to it? But that, I think that's the evolution is they're feeling out how, how this can be less of a startup petting zoo and more of a capability for the organization that drives meaningful impact. 

Ronja Stoffregen
Yeah, I couldn't agree more. So I think it's interesting to see it also from your perspective. And then what do you think is going to be the next one? So, we had the wave of corporate venture capital. We had a wave of venture building and accelerators. I feel everybody's been a mentor at this point in time. Now we have a wonderful hype in venture clienting. So yeah, what's next?

Fred Schonenberg
I saw some of this language on your website, which made me excited. I think you guys called it co-create with startups. It was a version of venture building. We've been doing, we call co-development. So very similar, but the idea of taking the best of the startup and combining it with the best of the large organizations. So complimentary IP coming together for joint development, I think is a really interesting play, especially if you get closer to the core of the business where you can take the world-class R&D team you already have and essentially inject them with new thinking and marry those two up to create something really exciting.

Ronja Stoffregen
All right. So we do another check-in in like 12 months.

Fred Schonenberg
Let's do it. Well, thank you so much. This was so much fun and I really appreciate it. And we hope we'll bring you back in 12 months. We'll see what's changed for both of us.

Ronja Stoffregen
I love that. All right. You all have a good weekend. Thank you so much for having me.

Fred Schonenberg
Thank you.