Venture Fund in the Works for SAP Software

By Therese Poletti and Matt Marshall, San Jose Mercury News, Calif.

May 13–German software giant SAP is expected to announce soon a $100 million venture capital fund to promote its NetWeaver software, according to industry sources.

SAP is creating the NetWeaver Fund to finance start-up companies that will create products that use NetWeaver software. NetWeaver is used to develop corporate Web applications.

The fund was first reported Friday by the Mercury News’ SiliconBeat blog.

“I won’t deny the story that was reported in the blog,” said SAP spokesman Bill Wohl in Newtown Square, Penn., the company’s U.S. headquarters. “We are working toward a possible announcement at SAPPHIRE, so stay tuned.”

SAPPHIRE is the company’s customer conference being held next week in Orlando, Fla.

SAP is in a head-to-head battle with Oracle for corporate software customers and hopes to work with Silicon Valley venture capital firms to drum up interest in NetWeaver software.

NetWeaver competes with Oracle’s Fusion MiddleWare, IBM’s WebSphere and BEA’s WebLogic.

This is not the first time a tech company has financed a fund to invest in start-up companies with the hope of creating demand for its products. In 1999, Intel, Morgan Stanley and others created a $250 million fund to encourage development of software to run on Intel’s Itanium chip. And in 1996, Sun Microsystems, Kleiner Perkins Caufield & Byers and others created a $100 million Java Fund to invest in companies developing applications using Sun’s Java programming language.

Individuals familiar with the Netweaver fund said it will not operate like a traditional venture capital fund, and that its deals will be run from SAP’s Pennsylvania headquarters rather than its Palo Alto offices.

SAP also said it will announce early next week that its subsidiary, TomorrowNow, will offer maintenance and support for Siebel Systems customers, at about half the price Oracle charges.

In January, Oracle completed its $5.85 billion purchase of Siebel Systems, which develops software to manage customer relationships.

Contact Therese Poletti at tpoletti@mercurynews.com or (415) 477-2510.

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