What are the major considerations in your investment thesis?
We are investing in companies which have the potential to disrupt the automotive industry or single parts of its current value chain. All our investments have the potential to significantly impact our industry. We are focusing on our Case strategy and its four pillars – connected, autonomous, shared and e-mobility.
On top of that, we are identifying businesses which have the same potential in supporting and service functions, like financial services. One example is our investment and cooperation with AutoGravity in production – robotics. On the one hand, our industry sees some challenges. On the other, these trends offer a huge potential for gaining sales and revenue.
What are your observations on trends and developments in your areas of focus? What is the disruptive potential of each one?
The key areas are Case. All of these elements have the potential to disrupt our industry on a standalone basis. All of them combined will create a change for the industry which we have never seen before. However, there can be different specific use cases for passenger cars and trucks, while both are based on similar technologies.
In connected cars, we see very interesting developments in using data created by and used to connect vehicles, be it to connect them with other vehicles or other devices. We expect a lot more specific business models to emerge out of the opportunities in tapping into the location and technical data of vehicles.
In the autonomous space, the trend is obvious. All original equipment manufacturers and a lot of startups are working toward fully autonomous driving. We see both – startups only focusing on sensors, like Lidars (light detection and ranging) and companies trying to come up with full autonomous solutions or even full vehicles, be it on the truck or passenger car side.
What about the shared space and electric vehicles?
The shared space is one area where we invested very early. On-demand or shared mobility is one of the areas which has already disrupted the taxi industry in some regions of the world and might have the potential to disrupt the whole automotive industry.
However, potential decline in car ownership might not necessarily go along with reduced number of vehicles. Changed consumer behaviour – for example, moving from public transport to on-demand services – could also benefit the automotive industry. We feel very well prepared with our activities. Our portfolio company Mytaxi is the ride-hailing market leader in Europe. It is, by the way, also a good example of how our portfolio can develop.
It started as a minority venture investment at a time when the German ride-hailing space was small and, in the meantime, it is a controlled unit with significant strategic importance for Daimler, being the market leader in the European ride-hailing sector and one of the most important businesses of Daimler’s mobility activities. If you think about combining autonomous connected vehicles with a ride-sharing service, this becomes very relevant.
As for the electric, this is one of our key areas. We launched a new brand family – EQ – and will introduce a set of new electric vehicles in the market in the coming years. We partake in investments in relevant companies which can support this, be it on the charging side, like Chargepoint, or on the battery or cell side, like Storedot.
You are the head of M&A technology and venture activities at Daimler. What are the advantages and challenges of combining VC investments with M&A investments?
We have chosen to combine both venture investments and M&A activities for all technology-related projects for all our divisions under one mandate. This ensures, on the one hand, that all our venture investments are fully aligned with Daimler’s overall strategy and, on the other, that the knowledge the team creates through the venture activities is being used for strategic acquisitions too. By being very close to all corporate functions we can also ensure that we bring operational and strategic benefit to our portfolio companies, whether by opening doors within Daimler or by nominating operational experts as board members or observers.
With which investors do you normally seek to co-invest and how do you source your VC dealflow?
We are very open and do co-investments with both strategic and financial investors. We have different sources. Our technical departments and strategy teams keep an eye on the market and what is going on in their area of responsibility. Here we get first inputs on which company might be a good fit. Moreover, we do specific screenings in certain areas where the subject matter experts feel they would need something on top. And we have partnerships with VC funds, incubator programs as well as trend scouts, and are working closely together with them. As well, we have launched a new website (https://www.daimler.com/innovation/venture/) where interested startups and VCs can find information about us and our contact data. )
Are Daimler’s investment goals in VC rounds primarily strategic, primarily financial or a mixture of both?
It is a mixture of both. We always invest in a company with a potential strategic benefit for Daimler. We are not trying to be a better financial investor than financial VCs, but do not do investments that are not expected to yield any financial return.
How much do you aim to commit in VC rounds annually? What is the geographic scope of your investments?
We do not have a fixed commitment or goal – we do investments when it makes sense and finance them with Daimler’s balance sheet. Therefore, we are completely stage-agnostic. Also in terms of regional focus, we are active worldwide, much like Daimler. For example, we have invested already in VC rounds not only in the US, Europe and China, but also in Israel.
Your most recent publically disclosed deal was in Volocopter, which develops helicopters for urban public transportation. What potential do you see in flying cars as commercially viable products and services in the near future?
We see a huge potential for urban applications. Volocoper fits perfectly into our Case strategy. Based on a quiet zero-emission drive system with high security levels, it combines connectivity functionalities with autonomous flight solutions and potential applications in a shared mobility ecosystem. Volocopter might create an urban air taxi service which could significantly change the options we have when travelling within the urban environment. Knowing that it still needs some time to solve regulations and technical feasibility, the dream of flying might be offered to a much broader group of users in the future.
What do you look for in a startup?
We are primarily focusing on the strategic fit in terms of business model or technology. On top of that, the team is very important. We need to feel the appetite and capabilities of the management to disrupt the industry and understand the benefit of cooperating together with Daimler. If this is not the case, we do not invest.
Do you support your portfolio companies from VC rounds in any way other than equity financing? Does Daimler seek partners and suppliers among them?
Yes, absolutely. Good companies would be able to get equity from other investors too. We are leveraging our organisational setup of being very close to other Daimler functions by providing access to Daimler or our ecosystem.
We always have a business unit acting as a business owner and sponsor to work with the company. If we do not have the willingness to do this with one of our units, we simply do not invest. This ensures that we always have an operational caretaker who works with the companies, be it to evaluate supply opportunities or other forms of cooperation. Sometimes we also create joint ventures on top of the investments, to jointly implement certain projects by combining our internal Daimler strengths and the strengths of the startup.
