In Focus: Business tools, Business Canvas

Article retrieved from: (http://www.theglobeandmail.com/report-on-business/small-business/sb-money/business-funding/sap-commits-650-million-to-venture-capital-fund/article14656965)

Picture retrieved from (http://international.iteem.ec-lille.fr/north-america/sap-a-useful-tool-for-companies%E2%80%A6/)

Venture capital is investing money into new or expanding businesses that has the potential for further growth. SAP’s commitment to venture capital signals a shift in their business plan, in particular their revenue streams and key partnerships. Research and development operations are typically expensive and sometimes can be unyielding. The $ 650 million fund will attract potential entrepreneurs to partner with SAP who is able to provide them with expertise, distribution channels, marketing and etcetera to grow their business. They are also expanding their key resources since they have a share in the assets of the companies they buy equity in. When these businesses become profitable and expand to a sizeable scale, SAP can sell their stake in the company for a significant amount which contributes to their revenue stream. SAP is also potentially attracting entrepreneurs that have businesses overseas and buying into these starts ups will expand their operations abroad which opens new opportunities and revenue streams from other countries. The right investments will potentially reduce their research and development cost since these starts ups are introducing new ideas into the market for SAP and they do not need to fund research projects or hire people to do so.

References:

SAP gloomy software trend: http://www.reuters.com/article/2013/10/21/us-sap-results-idUSBRE99K02I20131021

SAP expands partner program: http://www.pcworld.com/article/2045510/sap-expands-partner-program-for-application-development.html