Sherwin Prior is the “glue in the unit” of US-listed car maker General Motors’ venture unit, according to his boss, Jon Lauckner, chief technology officer, vice-president of research and development and president of GM Ventures.
Prior, who was also named a GCV Rising Star last year, joined GM Ventures, the corporate venturing unit of General Motors, in September 2010 and is “responsible for a range of activities including GM Ventures strategy, operations, deal-sourcing, deal negotiations and ongoing portfolio management”, he said.
As managing director of GM Ventures, he is also board observer and, in a few cases, a board member for many of GM Ventures’ portfolio companies, he added.
GM Ventures has invested a total of $240m in 36 startups over the past six years, diversified across five verticals – automotive cleantech, advanced materials, infotainment, other automotive-related technologies, and other automotive-related business models. GM Ventures has led more than 50% of the investments it has made. These investments include nine in new portfolio companies last year.
The unit has also had four exits returning $37m at an average annual rate of return of 42%. The four were RelayRides – now called Turo – when GM Ventures sold its stake as part of a then $25m series B round in July 2014, Sakti3, which was acquired by UK-based industrial group Dyson for $90m in October 2015, OpenSynergy, acquired by Japan-based electronics group Panasonic in July 2016, and Telogis, acquired by phone and cable operator Verizon in August last year, less than three years after its prior $93m round.
Prior said his greatest successes included “establishing a unique CVC operating model. “We behave a lot like financial investors representing GM as our limited partner. This means that we lead deals, participate in follow-ons and bridges. In other words, we try to be a strong syndicate partner.
“We have even led two recaps and brought in financial investors in subsequent tranches.”
Prior said this approach could be followed by other corporations for the industry to develop.
He said: “All companies have to embrace the environment in which they operate and take appropriate actions. The CVC space is no different. If corporates are going to operate in the venture ecosystem they must embrace it if they want to have success. This means they have to be reliable syndicate partners and build the same credibility that they rely on for success in their core business.
“Unfortunately, more than a few corporates ‘balkanise’ the venturing business by not following the fundamental tenants and operating principles of venture investing.
“Leading deals, participating in follow-ons and bridges and even letting some portfolio companies fail are all basics in the venture business so they must be done well and consistently.
“I give a lot of credit to Jon Lauckner [a GCV Powerlist 2016 winner] who envisioned the importance of having investment capability and experience on the GM Ventures team – not every CVC needs to hire a former VC, just a seasoned investor goes a long way.”
For his other successes, Prior said: “Second, we have made investments that are strategically important to General Motors. This is our primary mission.
“Third, in our six years since we launched GM Ventures we have already had four exits that have returned a significant amount of capital to GM.
“Finally, we have established GM Ventures as a value-added activity that has provided strategic and financial benefits in a low-cost and highly efficient way. We have done this while maintaining about the same number of professionals today that we did when we started.”
Although the team numbers have remained the personnel has changed, with Alisyn Malek rotated into another organisation in GM in October and Jerneja Loncar leaving in Europe “because we prefer to focus on the opportunities in the US, Israel and China,” according to Lauckner by email in August.
After graduating from Eastern Michigan University, where he remains a board trustee, Prior held a couple of financial analyst roles before coming to General Motors. Prior then left to return to his studies, this time at Michigan University, where he obtained an MBA.
Prior would then join investment bank Morgan Stanley as a senior associate for a couple of years before moving to Northpointe Capital as an equity analyst for the rest of the decade, while also lecturing in finance at Eastern Michigan University.
Prior said a number of things had attracted him to corporate venturing capital.
“First, I have a passion for the investment industry. Prior to GM Ventures, I worked with publicly traded micro-cap and small cap companies. Venture capital is the step before an IPO,so it just made sense.
“Second, CVC provided me an opportunity to be part of the development and commercialisation of innovative technologies. I am not a technical guy, but seeing technologies emerge that can change the world is pretty exciting.
“Finally, General Motors is an iconic, global brand that is well positioned to lead the auto industry into the future during a time of unprecedented change, so it was a no-brainer.”
However, Prior admitted the challenges of CVC in such an iconic brand remained.
He said: “Company cultures are seldom an easy fit for a CVC unit, especially in a manufacturing business that has a very different risk appetite than venture capital.
“So, resisting the ‘corporate anti-bodies’ is something that requires constant vigilance. We manage through these by working closely with key constituents in our company and adapting to changing plans and priorities.”
But he said he had no plans to move on: “I fully expect to continue to grow GM Ventures. Grow with respect to the total number of investments made, exits, and diversity of our portfolio holdings.
“We have accomplished a lot in the last six years but there is still more that can be done.”