Vehicle manufacturer Ford’s $182m investment in US-based cloud software development company Pivotal Software last week could be an indication that the firm now views corporate venturing as an investment option, as carmakers increasingly look to startups as a way to keep up with disruptive technology.
Initially founded as Pivotal Labs in 1989, the company provides businesses with data analytics and cloud software development tools, and through a separate unit, development services. It was acquired by IT infrastructure firm EMC in 2012 and spun out by EMC and its virtualisation subsidiary VMWare as Pivotal Software the following year.
Pivotal raised $253m in the series C round, at a $2.8bn post-money valuation, with Ford joined by VMWare, EMC and fellow corporates Microsoft and General Electric (GE). The funding follows the $105m paid by GE in 2013 for a 10% stake in Pivotal.
Ford is not an active corporate venturing participant and its investment in a startup is at this point atypical, but it supplied the cash following the signing of a strategic partnership in December 2015.
Through the collaboration, Ford’s product development and IT teams are utilising Pivotal’s software development expertise and its analytics and cloud platform technologies, particularly with regard to the connected car element of its Ford Smart Mobility initiative.
Ford Smart Mobility was launched by the carmaker in January 2015 to get a handle on what customers will want from a transportation ecosystem in the future. The scheme involves work on connectivity, mobility, autonomous vehicles, customer experience, data and analytics, and Ford intends to build part of the connected vehicle platform it is developing on top of Pivotal’s Cloud Foundry platform.
Much of the running in connected vehicle funding has so far been made outside the automotive industry, with Nokia, Intel and Alibaba each injecting nine-figure sums in dedicated connected car funds over the past few years.
Although Ford and several other automakers are developing connected car offerings, it is perhaps interesting they have generally not been that active in funding startups in the sector.
Most of General Motors’ investments have gone to alternative fuel producers, electric vehicle technology developers and ride or car sharing startups, its largest investment being the $500m it provided for ride hailing company Lyft earlier this year as part of a collaborative effort to establish an autonomous vehicle lift network. Daimler’s focus has generally been on mobility technology developers, such as fleet management technology producer Zonar Systems or professional driver service BlackLane.
The car manufacturer most active in connected car investments has been BMW, which has funded a string of startups in the sector through its BMW i Ventures unit, and which provides its customers with an in-vehicle app suite called ConnectedDrive. However, more and more of its competitors may well join BMW in funding connected car startups, especially considering the way the industry is moving.
A few years ago, electric vehicles and alternative fuels seemed to point the way to how cars would develop, but with autonomous driving technology progressing ever more quickly, it now seems likely that carmakers’ main threat lies from the likes of Google.
GM’s interest in Lyft makes sense because it is easy to imagine a future where people traverse cities using on-demand services provided by fleets of autonomous vehicles, with the bridge to that being a wide range of connected services such as parking and valet services, mapping or driver safety monitoring being made available through a single in-car platform.
The likes of Ford can see technology companies creating this new world and they will want to be on board when it comes.
– Photo courtesy of Ford Motor Company