GM isn’t the only auto maker with plans to act like a VC and invest money into young innovative auto tech companies. This week, BMW launched BMW i Ventures, which has plans to invest $100 million into mobile and eco-auto technologies, and has made its first investment in a mobile app called MyCityWay.
Corporations have increasingly moved into investing strategically in cleantech firms, from Google Ventures, to Intel Capital to Cisco to even a power company like NRG Energy. But it’s still somewhat unusual for an auto company to jump into the investing game. However, the big auto companies know they’ll have to innovate somehow — to compete with new independent disruptive rivals like Tesla and increasing competition from China — so these funds are their inaugural experimental moves.
MyCityWay is a mobile location-based app that bundles individual applications together and enables users to find destinations around the city like the closest Wi-Fi cafe and purchase local goods and services like tickets to a play. BMW has invested $5 million into the startup (download the app for iPhone here).
In contrast, GM Ventures has invested in electric vehicle maker Bright Automotive, battery startup Sakti3, and wireless charging firm Powermat, and has told us it’s looking at car-sharing options as well. Yeah, the GM portfolio is all over the map right now, but like BMW with its first investment, there’s a mobile angle to GM’s portfolio, too.
Car companies are turning to mobile apps as a way to extend their brands outside the cars themselves, as a way to connect drivers to their electric cars that need to be charged up at charging stations, and as a way to connect consumers in cars to their digital media (music, web, etc). To learn more about the intersection between cell phones and EVs (and connected cars) come to GreenNet 2011 on April 21 in San Francisco (early bird ticket sales end on Saturday).
GM Ventures President John Lauckner explained during a talk earlier this year what auto makers can bring to young startups as an investor, and also what GM is looking to finance. Lauckner explained how the company’s investments fit in its five key sectors to focus on: 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.
Not only does a chosen startup get an equity investment from GM, but often, a commercial relationship with GM, which could be crucial for an early-stage company. GM can also sometimes help the startup “shave the lead time off of the product development process,” by months or more, said Lauckner, as well as help raise the profile of the company. In exchange, it’s also common for GM to ask for “a head start,” or basically, a 12-month to 18-month exclusive lead time, before the startup starts selling the tech to other auto competitors.
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