Seismic changes in technology can occur on a regular basis, and those in tech must constantly obsess over relevance. That means continuously asking questions, such as how you will adapt and provide value to your startup, investors, and corporate communities.
One answer is to surround yourself with brilliant people, talk to them, share ideas with them, and make sure they constantly challenge you. This is why Orange Fab gathered a small board of advisors and we would like to introduce you to them, starting with Denis Barrier, the co-founder and chief executive of Cathay Innovation. Formerly the head of Orange’s investment arm, he has a good track record as an investor, backing companies like MoPub, Trifacta, Flite, Chime, and PDD.
He’s been an invaluable resource to us, which is why we’re proud to have him on our team. Orange Fab’s Julie Leclercq and Brian Warmoth both sat down with Denis to learn more about his story, what he’s investing in as part of Cathay Innovation, and why it’s important for startups and corporates to work together.
His Orange story and journey to Silicon Valley
Denis Barrier started his career at Orange as a researcher working on quantum optics and physics around hardware and electronics. Soon after, the company began encouraging researchers to start companies using their work, with the aim of funding these spin-off startups. “I joined Orange’s investment arm Innovacom to create this seed capital program,” Denis said. “It produced very good results and we created several meaningful companies out of Orange.”
While Orange enabled researchers to monetize their work, for the first time it helped place a value on the research and intellectual property the company produced. “We invented a system where, in exchange for some intellectual property brought to the newly-created startup, Orange could have a percentage of equity,” Denis explained. “The success of the startup would potentially enable [us] to get much more proceeds from the specific patents than any royalties.”
One success he saw was with Netcentrex, a company that Orange co-founded with Olivier Hersent out of Caen laboratories as a prototype for telecommunications around Voice over IP (VoIP). “We worked closely with Olivier and helped him create his first business plan, while even taking one share to be a co-founder with him before financing him!”
Denis went on to say “After a lot of further funding and many ups and downs, NetCentrex became the largest VoIP platform in Europe. Orange leveraged it as the core technology enabling it to launch ‘Triple Play’ (television, phone, and internet on the same line) in France with a very early time to market.” Netcentrex helped Orange be as agile as a startup, but with a scale enabling it to bring the Triple Play offering to more than five million customers in just a few years. Denis believed that the opportunities Orange provided to this bright researcher early on made a big impact on the digital lives of people and helped Orange enter the market very early.
Eventually, Denis became the head of Orange’s corporate ventures team, which had direct investments, investments in funds, and Orange Capital China. He also worked with Publicis to create a venture capital initiative called Iris Capital which was one of the first times two corporate entities worked together in the same fund that also delivered strategic and shared financial value. “We had nice exits and partnerships with Orange and Publicis,” he recounted.
But after a while, Denis yearned to be entrepreneurial and was convinced there was an opportunity to bridge the U.S. with Europe, and China “because the three ecosystems are different, complementary, and not connected enough.” This led him to work with fellow entrepreneur Ming-Po Cai.
The goal of Cathay Innovation
Ming-Po is the founder of Cathay Capital, one of the largest private equity firms focused on bridging value between China, Europe, and the U.S. It has grown to become a platform that now manages more than $2 billion in assets, but there’s a desire to focus on technology and venture capital which hasn’t been a focus for Cathay Group.
“We had the same vision and a unique human fit, so we decided to start Cathay Innovation as a venture capital firm with one fund and one global team based in San Francisco, Paris, Shanghai, and Beijing,” Denis said. “We invest in three geographics, help with new ideas, and provide cross-border operational value.”
Denis is convinced Cathay Innovation provides value that hasn’t been offered before, largely because of the level of scale. “We could achieve it because we have a good team and a world-class platform giving us the necessary scale needed in the times of global digitization. With our infrastructure and our ecosystem, we can make a difference in favor of the emergence of strong global venture-backed startups.”
Because of his familiarity working with corporations, Denis and Ming-Po secured some funding and Cathay has made some notable partnerships: It is working with Valeo to look at disruptions in the car business; Michelin for mobility innovation; BNP Paribas Cardif to understand changes in insurance; SEB for home automation; Total for new energies management; and ADP to explore smart infrastructures.
“All of this makes a unique pool of corporations with whom we can work and exchange together, introduce our startups, and create a multi-industries network effect,” Denis explained. “What is also very unique is that we gather our investors together. This is very important because our vision is that, in the new wave of the internet, different industries will collide and large companies must break all the silos.”
Cathay Innovation focuses on early growth investments in startups. Denis said his team will invest globally “in the digital revolution, be it cryptocurrencies, software, artificial intelligence, security, etc.” and the firm typically invests between $5 million to $20 million per company.
“We are more familiar with the industries we focus on and who are under disruption,” he said citing how Cathay invested in peer-to-peer car sharing service Drivy to better understand all aspects of mobility and Chime Bank, the leading 100% U.S. mobile bank, to look at FinTech. “By being deeply committed, and with a strong ecosystem in those verticals, naturally we are investing in these domains.”
The impact of startups working with corporates
We asked Denis about his experience with Orange Fab, especially since he was one of the few who was there in the beginning. “I’ve followed [the program’s] history since the beginning as it corresponded to my arrival in San Francisco.” Orange Silicon Valley’s CEO Georges Nahon “offered me an office where I found myself welcome in a place where great things were done and [you were] connected to the whole ecosystem of Silicon Valley.”
To him, “Orange Fab has been very smartly designed to be useful and with a differentiated value for entrepreneurs. It’s a smooth approach where entrepreneurs can come get the needed value and connect more broadly while involving a strong relationship with Orange.” Denis believes that Orange Fab’s openness to other corporations was a “pretty smart” move because not only could startups connect with Orange, but also have an opportunity to interact with dozens of Fortune 500 companies.
“It really works,” he said. “Now Orange Fab can continue to do the same thing successfully for a while.” But he believes naturally, there are ways to move the program forward. “Considering the many options possible, Orange Fab could focus more on important specific subjects, get even more partners from Silicon Valley, or new kinds of international participants.” Denis thinks just like a bicycle rider, people and companies have to move forward, or they’ll fall.
He left us with this parting thought: “I really trust that the Orange Fab team will continue to deliver innovation and value and that the next thing it does will surely be pretty incredible. Already unique in the world of corporates innovation, there is a potential to more broadly impact the world of digitalization. That’s why I’m excited and thrilled to see what will be the new endeavors this team will surely invent and operate.”