Jonas Landström, investment director and head of Americas at Volvo Group Venture Capital, the Sweden-based carmaker’s investment unit, has developed a good instinct for the themes and deals that will deliver strategic and financial returns.
This is perhaps no surprise for someone who trained as a radar system technician during his military service. The most helpful insights for his current job, though, probably came from co-founding a biotech tools company, Denator, shortly after graduating with an MSc in engineering physics from Chalmers University of Technology in 2005.
As chief operating officer at Denator until joining Volvo in 2010, Landström said: “I was responsible for raising several rounds of venture capital and believe having been at both sides of the table is a key experience that I build my investment approach on.”
He said he was attracted to corporate venturing for “the ability to join Sweden’s largest company and work on a truly massive scale while at the same time work with amazing entrepreneurs using the venture capital model.
“The automotive industry is truly multi-disciplinary and I had experienced what a small team could accomplish in a short amount of time.
“At the same time, I had first-hand experience of the challenges of scaling a product globally and truly believed that deep partnership between large, slow-moving corporates and startups could create win-win situations.
“Transportation of goods and people is such a fundamental fabric of our society. It stands in front of its biggest revolution since we went from horses to combustion engine vehicles.
“I would like to be able to tell my nine-month-old son that I was a small piece of the puzzle in transforming the transportation industry from one of the most dangerous and most polluting to safe, clean and efficient.”
Landström is becoming a larger part of this transformation after setting up Volvo Ventures US in late 2013 and developing an investment focus on the theme “tech meets transportation”. As at November, his American deals have included commuter bus service RidePal, Decisiv, a service for truck fleets, driver safety tool DriveCam developed by Lytx, local cargo sharing platform Cargomatic and Peloton, which has a system for vehicle-to-vehicle communications to link active safety systems between pairs of trucks.
Landström said: “The past five investments we have done have been based around this theme. It now represents approximately 50% of the expected exit value in the portfolio after only three years.”
However, generating a majority of Volvo’s dealflow from the US office can bring cultural challenges with headquarters. He said: “The difference in culture and approach between the Silicon Valley ecosystem and a traditional original equipment manufacturer, such as Volvo Group, is gigantic.
“It has been and continues to be a big challenge to convince the Volvo organisation to invest in and collaborate with startups that, from the outside, can seem chaotic with very high valuations.
“Getting the entrepreneurs in front of the senior management team so that they get the message directly from them has been key. Finding a way to manage the rapid pace in the Valley with the, at times, slow decision-making in a large corporate has also been a limiting factor. Building strong, trusted relationships with entrepreneurs early has been fundamental for getting access and managing the timeline.”
This trust comes from corporate venture capitalists (CVCs) being on their side. Landström said: “I think most CVCs need to create cultures that are truly founder friendly.
“The most important factor for success, both financially and strategically, is to attract and invest in the very best entrepreneurs. I think we as an industry sometimes forget this and push entrepreneurs into situations that might be favourable for the corporate over the short term, but leads to negative selection over time.
“There are enough people within large corporations that will optimise commercial deals in favour of the corporate entity to such an extent that significantly more value is created in the long term if the CVC is focused on finding disruptive win-win deals and supporting the entrepreneurs.”