IBM VC Group propels 'Innovation Ecosystem': Exclusive interview with IBM Strategy Director

EXCLUSIVE: IBM Venture Capital Strategy Interview
Written by Donna Bogatin, Contributor
As Director of Strategic Insights, Venture Capital Group IBM Corporate Strategy, Drew Clark drives external innovation into IBM business units. 

Clark is impassioned about propelling emerging technologies into the IBM ecosystem for mutual success and he shared his passion with me yesterday in a lengthy discussion about the mission of IBM Venture Capital Group. 

In 1999, IBM made a strategic decision to exit the applications business and determined that building an ecosystem of partners, working together rather than in competition, would be essential to its continued success in the marketplace, Clark told me.

As part of this strategic shift, IBM formed the Venture Capital Group (VCG) in 2000, a small but highly skilled team of IBM professionals dedicated to engaging the worldwide venture capital community to drive IBM friendly innovation in the external marketplace. 

A 20-year IBM veteran, Clark led several entrepreneurial initiatives, including the formation of IBM's Internet Division. He also led IBM's search, text mining and knowledge-management initiatives for IBM Software.

Clark has been awarded two patents in software testing and Artificial Intelligence, holds a BS in physics from Western Carolina University and has completed all coursework toward a PhD in plasma physics at University of Texas at Austin.

In contrast with corporate venturing strategies focused on direct investments, IBM pursues a relationship strategy. Clark underscored to me that the strategy is paying off, for IBM, its ecosystem partners and enterprise customers.


IBM works with about 120 leading VC firms to gain insights into emerging technologies, nurture potential startup partners and drive open standards in the marketplace, Clark told me.

IBM VCG Accomplishments:

*Partnerships formed with more than 1,300 VC-backed companies in the past two years.

*Fostering of VC portfolio investment in companies building solutions based on IBM’s open technology, growing from a base of 3% in 2000 to more than 30% of companies in 2005.

*Catalyst for 15 IBM acquisitions involving business intelligence, Service Oriented Architecture (SOA) and security.

*Instrumental in formation of the open hardware ecosystem built around the Power architecture. VCs are a key part of the Power.Org consortium, having invested close to $300 million in Power.Org start-ups. VC-backed companies currently comprise a third of the consortium.

*Development to number one position in the blade server market with more than 40% marketshare; More than 200 application and hardware providers have adopted IBM blades initiatives, with 1 in 4 of the companies entering the IBM ecosystem via VCG.

*Walden International 2006 commitment to invest up to $100 million of its venture fund in BladeCenter ecosystem partners over the next five years. Over 50 percent of this investment will be focused on the Asian market. To date Walden has already invested in nearly a dozen component and solution developers in the blade market and plans to double its portfolios in the blade industry over the next 2-5 years.

*Formation of the Venture Capital Advisory Council in 2005 with leading venture capital firms Accel Partners, Darby Overseas Investment Ltd, Draper Fisher Jurvetson, Hummer Winblad Venture Partners, 3i, US Venture Partners and Walden International. The council is focused on accelerating innovation around the deployment of open standards based solutions, particularly in emerging markets.

*The establishment of a European Venture Capital Center in 2006 and the launch of an Innovation Center in Dublin to build stronger ties with the venture capital community across Europe.

*Driving innovation in China; In just 18 months, IBM established partnerships with more than 100 VC-backed startups in China, giving them access to IBM technology expertise, routes to market, and joint customer engagements.

Clark underscored to me that the impact of IBM VCG successes in its six years of operation are of particular note given that IBM's business partnerships account for one-third of its revenue.

IBM VCG has a three-prong value proposition:

1) Leading VCs gain insight into IBM's vision and strategy and the opportunity to create profits from their investments in portfolio companies.

2) Startups gain access to IBM technological expertise, routes to market, greater credibility and validation of their solutions.

3) IBM gains “a front row seat” to partake of the best technologies and nurture potential partners in developing more innovative solutions to help IBM customers transform their business operations and gain a competitive edge in their markets.

Clark is particularly proud of IBM VCG collaboration with Laslzo and Zend. 

Laszlo Systems, developer of the OpenLaszlo platform and provider of rich Internet applications and services.

Laszlo teamed with IBM to propose the "IDE for Laszlo" integrated development environment (IDE) project at Eclipse. The joint initiative is designed to further accelerate the development and deployment of OpenLaszlo applications and to support the Eclipse Foundation, the open source community committed to the implementation of a universal development platform.

The OpenLaszlo platform is an open source, XML-native platform for developing RIAs that run in any modern Web browser. IBM contributes the "IDE for Laszlo," allowing developers to build RIAs, more quickly and easily, using Eclipse.

IBM also offers "Faces for Laszlo," allowing developers to use OpenLaszlo to create rich Internet applications in portals and J2EE environments.

Zend, “The php Company,” Changing the way “Web Applications are Built and Deployed”

Zend and IBM teamed to accelerate PHP momentum by agreeing to develop the industry's first integrated solution designed to help developers build and deploy applications and services based on PHP.
IBM partnered with Zend to deliver Zend Core for IBM. IBM and Zend are also jointly working on furthering PHP technology to include improved high-level database integration frameworks and enhanced PHP Web services standards.
Zend Core for IBM will provide the industry's first seamless out-of-the-box, PHP development and production environment, completely supported by Zend. The solution features seamless integration with IBM's Cloudscape database server and DB2 Universal Database.

For Clark, Zend and Laszlo successes are IBM VCG successes, living examples of the IBM VCG fueled innovation ecosystem through the development of mutually beneficial relationships with VCs and the companies in which they invest.

ALSO: Social Capital Theory Meets Web 2.0, by Donna Bogatin and
IBM Research: Mining for the future of search

Editorial standards