GM Ventures — the VC arm of the auto giant GM — is now rapidly starting to invest its $100 million fund into auto tech innovations. This morning GM Ventures said it has pumped $7 million into battery startup Envia Systems, participating in a $17 million round, which also included Asahi Kasei, Asahi Glass, Bay Partners, Redpoint and Panagea Ventures. GM says it has also secured the rights to use Envia’s cathode materials for future GM vehicles.
Early-stage Envia develops low-cost cathode materials for vehicle lithium ion batteries and other energy storage applications, and the company is also expanding its focus to include anode technology. A battery is made up of an anode on one side and a cathode on the other, with electrolyte in between. Lithium ions travel from the anode to the cathode through the electrolyte, creating a chemical reaction that allows electrons to be harvested along the way.
GM recently launched its electric Volt vehicle, and has placed a real bet on building EVs into its portfolio. Bloomberg New Energy Finance predicts there will be 1.6 million plug-in cars sold by 2015, rising to 7.6 million by 2020. In contrast in 2010, the U.S. had about 245 million passenger cars, SUVs, vans, and light trucks.
Envia already has a GM connection. Last May Robert Stempel, whose brief tenure as chairman and chief executive for GM in the early nineties earned him the moniker “father of the EV-1,” in some circles, joined the board of directors for Envia. On a side note, other startups have pulled former GM execs to their companies, too, including recently Coda’s new CEO, who started GM’s Shanghai division, and Boston-Power exec Robert Purcell, who worked on electric models for the automaker as head of GM’s Advanced Technology Vehicles Group.
GM only launched GM Ventures last summer, and it’s the first time in history that GM has experimented on an investment arm. But already GM Ventures has started to pick its choices, which has included electric vehicle maker Bright Automotive, battery startup Sakti3, and wireless charging firm Powermat. At an event last week GM Ventures President John Lauckner said GM Ventures is focusing on five key sectors: automotive cleantech (electric and low-carbon cars), infotainment, smart materials (light weight, phase change, forming tech), other automotive tech (like advanced sensors), and alternatives to traditional business models (like car sharing).
The mission statement of GM Ventures is basically a spinoff of the mission statement of GM: Help GM build the best vehicles. Envia Systems can clearly help GM with that goal, given its core battery technology. Although, I don’t know more of the financial details, GM often times wants “a head start,” or basically a 12-month to 18-month exclusive lead time on a startup’s product, before the startup starts selling the tech to other auto competitors. As Lauckner put it at the event: “We’ve done that for a couple [startups] and it works pretty well.”
GM can also bring a lot to Envia. Lauckner explained last week that when GM starts working on the technology with a company at an early stage, GM can likely help the startup “shave the lead time off of the product development process,” by months or more. GM can also raise the profile of a startup and “de-risk the equity structure of the company,” explained Lauckner. As a bonus, automotive testing and R&D is also an expensive undertaking and GM can help startups use its facilities and expensive tools. This is all in addition to being a massive key customer, and an equity backer of the startup.
Envia already raised a $3.2 million first round of financing in 2008 and by September of 2009, a regulatory filing indicates that Envia raised the bulk of another $7.7 million Series B round. Envia also snagged a first-round $4 million grant under the Department of Energy’s high-risk energy tech fund, ARPA-E (Advanced Research Projects Agency-Energy). Working in collaboration with the Argonne National Laboratory on the DOE-backed research, Envia aims to develop a prototype of a non-graphite anode for vehicle batteries.
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Image courtesy of Envia.