US-listed industrial conglomerate General Electric (GE) has set up a software venturing unit and hired Mike Dolbec to manage the fund.
The software investments are designed to avoid being what GE’s chief executive, Jeffrey Immelt, called at the launch event in San Francisco “stupid money” trying to make large returns but instead about making connections and learning between industrial applications and software and analytics.
In a report published ahead of the launch, GE said the combination of internet connections and software with machines and industry could add $10 trillion to $15 trillion to the world’s gross domestic product.
In the report written by Peter Evans, GE’s director of global strategy and analytics, and Marco Annunziata, GE’s chief economist, they said: “The world is on the threshold of a new era of innovation and change with the rise of the industrial internet.
“It is taking place through the convergence of the global industrial system with the power of advanced computing, analytics, low-cost sensing and new levels of connectivity permitted by the internet.”
A 1% reduction in jet fuel use from the industrial internet could yield $30bn in savings over 15 years, while in healthcare it can help track and optimize treatment, patient flow, and equipment use in hospitals where a 1% efficiency gain could yield more than $63bn in savings.
Immelt said that when it came to analytics start-ups in Silicon Valley in California: “We are open for business.”
GE has started a competition, Industrial Internet Quests, to find algorithms and applications that can increase productivity for the health and aviation sectors and started a lab that will focus on software in New York as well as making equity investments in and acquisitions of software and data start-ups.
The world’s largest maker of jet engines, diesel locomotives and medical-imaging devices is setting aside as much as $100m for the corporate venturing investments, which will supplement hiring at its new research centre in San Ramon, California, Immelt said in an interview with newswire Bloomberg. The software group under Bill Ruh was set up in California about a year ago.
Mark Little, GE’s chief technology officer, added to Bloomberg: “We are engaged in looking at acquisitions, probably smaller things, and we are engaged in looking at venture capital, because it lets us see a flow of information that we wouldn’t otherwise see.”
Dolbec is managing director of venture capital at GE Software after nearly three years as vice-president of venture capital and open innovation at South Korea-based conglomerate LG’s venturing unit, which has just been renamed LB Investment from LG Venture Investment.
As a successful entrepreneur-turned-investor, Dolbec said on his LinkedIn page that his strategic investments have delivered an 18-times return of $949m from previous roles in venturing.
As well as LG, these roles have included working at technology company IBM, mobile phone operator Orange, equipment maker 3Com, and venture capital firms Greylock, Ignite Ventures and Kleiner Perkins Caufield & Byers.
Dolbec sold the assets from his former start-up, OmniSky, to internet services provider Earthlink in 2001 after the dot.com crash pushed the wireless company into bankruptcy.
Dolbec said: “It is a huge opportunity at a very exciting time in history for software, Silicon Valley and CVC [corporate venture capital]. It is a good time for big data and enterprise computing in the Valley, company formation and investment momentum has been picking up dramatically. This software initiative is a big deal inside GE and, similar to its strategy in health and energy, GE is creating a vibrant business development, open innovation and acquisitions strategy and it is exhilarating to be working with people who are sophisticated about software and start-ups and to be on a team that is aware of the hard work and investment that is required to execute that strategy, not just set up the goals and turn away.”
Also in San Francisco, he will be working with a team at GE Software, including Pearl Chou Chen, managing director of business development and strategic alliances.