Innovation is the driving force behind Siemens' activities. In the current fiscal year, the Munich-based company is expected to invest more than 6 billion euros in new inventions. That is around 8% of turnover. With the founding of Next47 in October 2016, the Group wanted to open up another level of innovation. The aim: to take collaboration with start-ups to a much higher level.

With the name Next47, Siemens is tying in with the founding myth of 1847. In 2016, then CEO Joe Kaeser announced that the independent unit would bundle the existing commitment to start-ups, drive innovation and provide impetus for corporate cultural change. With Next47, Siemens is venturing „an exciting push for disruptive innovations“.

Lakshmikanth Ananth, who has been General Manager of the venture capital unit since it was founded and whose first name is usually abbreviated to Lak, had three „Cs“ written on his banner in 2016. Firstly, as an investor, to invest where innovation takes place („Capital“). Secondly, as an active investor, to provide a greenhouse for ideas to flourish („Create“), and thirdly, to offer start-ups a point of contact with Siemens. Although they want to tap into the power of the company, they do not want to struggle with its complexity („Catalyst“), explained Ananth.

Siemens allocated a budget of 1 billion euros for the first five years. Five fields of innovation were initially identified: artificial intelligence, decentralised electrification, autonomous machines, blockchain applications and networked (e-)mobility. These were later joined by 3D printing, robotics and drones as well as virtual reality.

Today, Next47 explains that it focuses on early and expansion-stage companies based in the United States, Europe, Israel and India: „Artificial intelligence is a key area of interest, taking a comprehensive approach that encompasses the application layer, infrastructure, data stack, cyber technology, robotics and systems.“

The unit highlights the following as successful investments: cloud-based field service manager Build Ops, digital freight logistics company Sennder, drone manufacturer Skydio, maintenance specialist Tractian, deep learning specialist Vast Data and building security company Verkada.

Eight years after its foundation, it is difficult to tell to what extent Next47 has achieved or failed to achieve its goals. The cumulative investment volume is not stated. The unit hardly provides any hard data. 18 people are active in the so-called Capital Team, spread across six locations in Palo Alto, London, Munich, Berlin, Paris and Tel Aviv. But even in Munich, it has not been said in recent years that the network has been responsible for important innovations.

Nevertheless, Siemens CFO Ralf Thomas emphasises that Next47 acts as a seismograph and early indicator for innovations that are or could become relevant for Siemens customers. „Collaborating with start-ups enables us to recognise trends and disruptive developments at an early stage,“ he is quoted as saying. In doing so, Siemens gains valuable insights with Next47 that are helpful to the Group in aligning its build, buy and partner strategies: „As a technology leader, we can continue to actively shape the future of the industry.“

The Next47 website currently lists 47 investments. It is noticeable that the pace of investment in new companies has recently dropped significantly. In 2023, only one new investment was made with Radiant Security, and in the current year there is also only one share purchase with Skylo. Even in the start year 2017, more investments were reported with two investments. In the following years, there were nine, ten, eight, nine and then seven partnerships in 2022.

Next47 no longer appears to be involved in some of the 47 investments, or only to a limited extent, leaving around 40 current investments. Aeva and Markforged went public, five other companies were sold according to the Next47 website: Deepscale to Tesla (2019), Rideos to Gopuff (2021), Turvo to Lineage Logistics (2022), Armorblox to Cisco (2023) and Noname to Akamai (2024).

Siemens only publishes rudimentary data on the sums invested. The 2022/2023 annual report contains a total for venture capital investments, most of which are provided by Next47 - although the independent company Next47 is likely to use a different accounting method. Accordingly, the amount fell from 607 to 578 million euros in the past cycle. New investments are stated at 156 million euros after 221 million euros in the previous year. Sales totalled 40 million euros, after 100 million euros were generated in 2021/2022.

Measured against these new investments, Next47 remains active. In the 2018/2019 financial year, when ten new investments were acquired, the largest number in a calendar year (2019), new investments and acquisitions totalled 153 million euros - the same level as in 2022/2023. In the 2019/2020 financial year, 249 million euros were invested, and as much as 522 million euros in the following year. However, as with sales, this figure is likely to include transactions beyond Next47 in some cases.

The extent to which Next47 is economically successful cannot be determined from the annual reports. Siemens does show the results of the Technology and Next47 units in the „Reconciliation of consolidated financial statements“ in the „Innovation“ column, but only cumulatively. As the central R&D department, Technology is largely an expense item. The loss in the past financial year totalled 195 million euros after 190 million euros in the previous financial year.

Next47 also sees itself as a „trainer“ for those Siemens employees who are to be equipped with start-up tools. According to Next47, more than 2,000 employees have benefited from corresponding accelerator programmes. Training on how every Siemens manager can act like a start-up founder has reached more than 20,000 managers, it says.

„Next47 helps us to further strengthen our culture as a technology company,“ explains CFO Thomas. The manager concludes that Next47 works day in, day out in the world of start-ups, where speed and focus are crucial in order to make rapid progress: „Our Siemens teams benefit from this experience and can thus enrich their promising ideas with the impressive speed and extreme customer focus of a start-up.“