GM and Ford taking different venture capital routes to capture innovative technology

Article by Anita Panait, on September 6, 2013

General Motors and Ford Motor Co. are taking separate routes as they to capture innovative ideas and technology that could bring change to the auto industry. Both Detroit-based carmakers are intending to develop and use a similar range of advanced technologies that many believes, particularly those from Silicon Valley, could become game-changers.

However, GM's approach is centered on venture capital, which is money provided to early-stage, high-potential yet high-risk startups. Adopting a practice common in Silicon Valley, GM set up a corporate venture capital group in 2010, which since has been providing early-stage funding to entrepreneurs and startup firms in sectors that include advanced materials to alternate fuels.

These startups are typically those who have the potential to develop a new technology that could be critical to a carmaker's growth. Once the technology becomes fully developed, a carmaker has the option to adopt it to use on its models, thus becoming that startup's first customer.

Jon Lauckner, president of GM Ventures and chief of GM's R&D organization, told Reuters that they typically invest in technology that they intend to implement in GM vehicles. For instance, Powermat has announced it will supply a wireless charger for smartphones in some 2014 GM vehicles.

As for other technologies developed by other startups financed by the venture fund, Lauckner said it is too soon to tell when some of them will be adopted since the fund is only three years old.

On the other hand, Ford shut down corporate venture arm a decade ago. Ford was an early investor in Sirius and other tech startups. Today, however, Ford is preferring partnerships over ownership, which means it may not have to spend as much as GM is spending. The carmaker is also focusing mainly on technologies that allow or enhance what it dubbed as "the next-generation consumer experience in the vehicle"

Ford, however, may still benefit from venture capital, albeit indirectly as Executive Chairman Bill Ford owns Fontinalis Partners, a private venture capital firm. On its Web site, Fontinalis Partners, said its investments are focused on "transportation technologies of tomorrow," including some that may be implemented on Ford vehicles. [source: automotive news - sub. required]

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