Innovation cycles are getting shorter and shorter. As a result, we must be agile and flexible in how we manage and budget our innovation projects. We orient ourselves toward the best-practice approaches used by innovative start-ups and successful companies, and to the latest findings from research and academia.
Portfolio and Innovation Board
The Portfolio & Innovation Board (PIB) plays a central role in managing our innovations. This Group-wide body ensures that we set the right priorities by identifying and selecting the innovation projects for our Group and deciding on the method of implementation. Our efforts are guided primarily by the Group strategy and we create full transparency across the Group regarding our investments in innovation.
Corporate Innovation Fund
Our Corporate Innovation Fund (CIF) is managed centrally by the PIB. Similar to a venture capital approach, the CIF offers all business and product ideas generated within the Group a flexible and results-oriented form of funding for a specific project phase. The provision of an additional innovation budget allows us, for example, to fund new innovation projects at short notice and with little red tape. Such financing is granted independently of annual planning periods, and therefore intensifies our focus on market and customer requirements. Innovation can take place anywhere across Deutsche Telekom, as long as the proposed business and product ideas fit within our Group’s central innovation focuses.
We established the Investment Committee to speed up investment decisions on our multi-year innovation priorities. Its objective is to act like an (internal) venture capitalist. The Investment Committee allocates funding according to success, orienting itself to the approach used in the start-up industry and among venture capital investors, whereby raising new funding from capital investors is dependent on the venture’s performance. This gives us the flexibility we need when developing innovation topics and focuses efforts on success. Funding is made available for the next project phase only when specific outcomes that are relevant to our customers are achieved.
Deutsche Telekom Capital Partners
Deutsche Telekom Capital Partners (DTCP), established in early 2015, is Deutsche Telekom’s investment management group. It manages approximately USD 1.7 billion of assets and advises a portfolio of over 60 companies on behalf of Deutsche Telekom and other institutional investors. DTCP pursues two investment strategies: growth equity in Europe, the United States, and Asia, and investments in digital infrastructure in Europe. The prime motive for DTCP’s investments is financial. For example, it acquires shares in companies still in the growth phase and aids those companies’ further growth, with a view to selling its stake for a profit later on. DTCP also plays an active role in establishing business relations between the innovative portfolio companies and Deutsche Telekom in order to add value for both sides.
In the growth equity field, the focus on cloud-based software-as-a-service (SaaS) solutions for companies resulted in a positive development, not least due to the spike in the number of people working from home and to increasing digitalization. New additions to the growth equity portfolio included Aircall (call center software), Arctic Wolf Networks (corporate network security), Auth0 (single sign-on systems), Catenoid (online video), and Epsagon (app management). In addition, DTCP increased its stakes in the successful portfolio companies AppsFlyer (marketing analytics) and LeanIX (IT architecture suite). Through the entrance of a new majority shareholder in Pipedrive, a provider of CRM software, DTCP was able to divest part of its stake in the company. The successful investment in Community Fibre, a fiber-optic provider for the London metropolitan area, was DTCP’s first in a fiber-optic network and another milestone in the field of digital infrastructure. Cell towers, fiber-optic networks, and data centers are set to form a focus of further DTCP investments.
The strategic investment fund Telekom Innovation Pool (TIP) is available for investments that are mainly strategically motivated. Advised by DTCP, Deutsche Telekom makes investments in and promotes business start-ups that have a strategic focus and clearly collaborate with the Group’s business managers. TIP actively pursues long-term innovations for the Deutsche Telekom Group, particularly in the fields of software-defined networking (SDN) and the digitalization of business operations. In 2020, TIP made five new corporate investments: Cynet (network security), Everphone (rented mobile devices), RemoteMyApp (cloud-based gaming solutions), Weaveworks (Kubernetes services), and vHive (drone surveillance of business assets).