SAP makes first NetWeaver Fund investment

Enterprise applications vendor SAP opened the purse strings of its NetWeaver Fund for the first time Tuesday, making an unspecified equity investment in Questra, an intelligent device management software company and SAP partner.

SAP announced the establishment of its $125 million global NetWeaver Fund in May at its Sapphire user conference in Orlando, Florida. The fund is designed to provide an additional incentive to the company's partners to develop offerings based on SAP's three-year-old NetWeaver integration platform, which lies at the heart of the vendor's Web-based Enterprise Services Architecture (ESA).

"We've positioned the fund as another vehicle or tool to form a strong relationship with our partners," Zia Yusuf, the fund's co-manager and executive vice president of platform ecosystem at SAP, said. "We take a company who's already an SAP partner and make that relationship even stronger."

SAP didn't disclose the exact amount of its investment in Questra, but the maximum limit on the fund's investment per company is nominally set at $5 million, according to Yusuf. He declined to comment on other potential investment targets. "We shall take the opportunities as they come," Yusuf said, adding that the amount of money SAP will invest in individual partners in the future will vary in size.

Questra and SAP have already worked together on the Questra RemoteService composite application which is being used by their joint customer Heidelberger Druckmaschinen, a leading printing press supplier. The composite application integrates Questra's intelligent device management (IDM) technology suite with SAP's service and asset management software so that manufacturers can monitor remote devices and automatically access equipment data and fault information via their SAP application. SAP certified the composite application for use on NetWeaver in July.

The equity investment will help Questra speed up its development of more composite applications as well as expand its sales and support operations, Emil Wang, president and chief executive officer of Questra, said.

"We're filling a very interesting white space in a customer's strategy," Wang said. "Most customers have developed a very sophisticated intelligence infrastructure in their ERP [enterprise resource planning], CRM [customer relationship management] and supply chain software. We can take that intelligence and extend it out to their products at their customers' sites." He describes Questra's IDM suite as providing the "last-mile" connection between a company's products located at a customer's facility and the company's back-end software systems.

When SAP unveiled the NetWeaver Fund in May, CEO Henning Kagermann said it was possible that the vendor might look to acquire some of the partners it invests in at a later date. Questra's Wang wasn't too concerned about that future possibility. "As a venture-backed company, we understand acquisition might be an outcome," he said. "It wouldn't be a goal of ours, but we wouldn't preclude it."

Questra has just over 30 customers including Agfa, General Electric, Kodak, and Samsung, Wang said.

SAP's investment formed part of Questra's latest funding round announced Tuesday which totaled $12.5 million and also included investments from venture capitalists Trident Capital and Menlo Ventures.