Those corporate venturing units in the transport and logistics industries continued to back companies in an effort to look for technological change.
Many are braced for significant change to the trans-port industry resulting from wearable computing and the internet of things. Some believe this is a big opportunity for transport companies.
John Suh, managing director of Hyundai Ventures, the corporate venturing unit of the South Korea-based car company, said: “According to Mary Meeker [a partner at venture capital firm Kleiner Perkins Caufield & Byers] and Tao Lang [chief financial officer of real-estate investor CapitaLand], 2014 begins the growth of the ‘wearable/everywhere’ computing trend.
“We have studied this deeply and have the data which supports Meeker’s and Lang’s claim. Today car compa-nies are reacting to the impact of smartphones and mobile internet – a trend which started in the early 2000s. Over the next five years, it will be interesting to see how car companies respond to this trend. We are obviously seeing some activity already. For me the question is: Will car companies find their own voice in wearable/everywhere computing by actively defining the vision of everywhere computing?’”
There is a take-off in start-ups working on many areas that interact with transport, due to this technological trend.
Jon Lauckner, automotive company General Motors’ chief technical officer, vice-president of research and devel-opment and president of its corporate venturing unit GM Ventures, said: “Key trends included new start-ups in tradi-tional automotive areas like materials and propulsion, plus a greater number of start-ups, compared with a couple of years ago, targeting non-traditional automotive technology like connected vehicle and digital services, cybersecurity, controls, software and infotainment.”
Johan Carlsson, president of Volvo Group Venture Capital, said: “There is increased interest from the start-up and venture community in the transportation value chain.”He added: “The connected vehicle area is hot and hosts a suite of high-growth companies as well as interesting start-ups.”
In logistics groups, Waste Management’s corporate venturing unit, which has built up a $300m to $400m start-up stake portfolio, is seeking to decrease its equity exposure to start-ups, which was reported by news provider Wall Street Journal as “a move away” from start-ups. Accord-ing to Waste Management’s Joe Vaillancourt, the Wall Street Journal had “mischaracterised” the changes at Waste Management regarding its venturing unit, adding that Waste Management was reevaluating the portfolio to decrease its equity exposure and increase the strategic leverage and time to commercialisation, but there was no wholesale effort to divest (see profile).
GM Ventures’ Lauckner said: “The majority of our port-folio companies are actively working with our technical organisation to implement their technologies in GM vehicles, with several nearing production.” Lauckner added: “Silicon Valley and Israel represent the most significant source of start-ups with automotive-related technology, although other countries in Europe and Asia have start-ups that are focused on advanced automotive technology as well.”
Ignaas Caryn, director of innovation and venturing at Netherlands-based airline KLM and its representative at Mainport Innovation Fund, a partnership involving the Dutch airline, Delft University of Technology, Schiphol and Rabobank, said: “The aviation sector is expected to double in size by 2030. However, this growth can only be realised if the carbon footprint is reduced dras-tically, energy independence is secured and safety is guaran-teed. Our sector is increasingly influenced by other industries, such as IT, telecoms and even the chemical and bioenergy industries. Finding excellent ways for collaboration with these industries will be crucial to sus-tained success.”
Kai Engelhardt, head of Germany-based automotive parts company Mahle’s unit Mahle Corporate Venturing, said: “Regarding our automotive ven-ture capital focus, we see inter-esting companies offering inter-esting technologies, especially advanced materials, coatings and manufacturing processes. Within the non-automotive sec-tor, we see potential in the water segment but also attractive con-cepts regarding services and technologies for the oil and gas industry.”
Some groups focused on their portfolio this year. Hyundai Ventures’ Suh said: “Partly due to my local staffing levels (see report in the people section), I decided to focus our 2013 efforts on making sure our existing US portfolio companies – SoundHound and Mojo Mobility – were introduced to, and built business relationships with, teams within Hyundai and Kia. As one small example, SoundHound is a 2014 co-sponsor for Hyundai Motorsport’s World Rally Championship car. We will have more announcements early this year about SoundHound. Both portfolio companies have done very well in their primary markets too. He added: “I also facilitated working level relationships between Apple’s iOS in the Car, and Hyundai-Kia vehicle infotainment technology teams. Hyundai and Kia partici-pated in Apple’s Worldwide Developers Conference 2013 announcements about iOS in the Car. Additional information will be announced this year.”
Deals
Deal activity motored along nicely for some groups in 2013.
Lauckner, of GM Ventures, said: “GM Ventures had a very productive year with a total of 10 investments (four new, six follow-on). The total invested during 2013 was about $35m, and represented all five of GM Ventures’ focus areas of automotive clean-tech, infotainment, advanced materials, sensors and processing technology, and new business models.” GM Ventures’ investments included involvement in the $34m C round raised by US-based electric bus company Proterra, and Powermat, an Israel-based company making wireless charging pads for mobile devices, buying Finland-based peer PowerKiss for an undisclosed amount.
Lauckner added: “The new start-ups in 2013 bring the GM Ventures portfolio to 20 companies, which is notewor-thy for a venture organisation that is only three and a half years old.”
Volvo’s Carlsson pointed to the units’ backing of driver risk management company Drivecam and corporate com-muting solution company Ridepal, which delivers commuting solutions to corporates, as well as to six exits. The com-pany’s portfolio includes 14 companies and three funds.
Xange Private Equity, which is backed by multiple corporate investors including France-based post office La Poste, said it had secured seven trade sales within its technology and innovation team – the sale of Kiala to UPS, Delamaison to Leroy Merlin, Iptego to ACME Packet, Impika to Xerox, Run-myprocess to Fujitsu, Webedia to Fima-lac, cross-channel marketing company Neolane to Adobe, and big data specialist Kxen to Germany-based software com-pany SAP.
Intel Capital, the corporate venturing unit of the US-based semiconductor com-pany, is also active in the sector, invest-ing from a $100m Connected Car Fund. Deals included backing Taiwan-based SanJet Technology, a digital image solu-tion provider in greater China.
Sudheer Kuppam, Intel Capital’s Asia-Pacific managing director, said: “SanJet is well-placed to capitalise on the growing demand for video consumption in and around the vehicle. We are excited by their roadmap and the potential they bring to high-end smart monitoring devices.”
BMW iVentures, the corporate venturing unit of the Germany-based automotive company, backed Life360, a US-based family location app.
Amadeus Ventures, which was launched last year by Spain-based travel group Amadeus IT Group, invested in Yapta, a corporate airfare comparison service.
People
Peter Williams, former Selfridges chief executive, was appointed in Decem-ber 2013 as non-executive chair-man of Mister Spex, a Germany-based online optician backed by Xange Capital.
Hyundai Ventures’ Suh said: “We added two more staff to increase our capacity to source, evaluate and proc-ess investment and partnership opportunities.”
Funds
Amadeus, a Spain-based travel operator, has launched Amadeus Ventures, a funding programme “to drive strate-gic value through early-stage minority investments in start-ups sitting at the crossroads of travel and technology.”
Katherine Grass, head of Amadeus Ventures, said in a blog: “The main objective of the fund is to identify and invest in start-up companies that have already developed a working prototype and sit in niche areas of the sector that we believe are at the forefront of developing market trends. “Of course, Amadeus is looking at the potential financial perform-ance of the investment, but equally at the tight commercial relationships that we will foster with the companies we invest in. And it is just as important to us that we encourage innovation for the travel industry, since innovation is part of Amadeus’s DNA.”
Mainport Innovation Fund’s Caryn said: “Next year our fund will be fully invested. We are quite satisfied with where we are today although our real success needs to come with exits.” He said promising portfolio companies on this growth path included Netherlands-based simulator company Multi-Pilot Simulations and Netherlands-based radar com-pany Robin Radar.
MPS flies to success with Mainport
Global Corporate venturing interviewed Dick Verburg, chief execu-tive of KLM and Schiphol Airport-backed Mainport Innovation Fund portfolio company Multi Pilot Simulations (MPS), which is a Nether-lands-based flight simulator company.
What has it been like working with Mainport Innovation Fund (MIF)? Obviously we had already started when MIF invested in MPS and we are in a highly specialist area of aviation in which we have a long-standing experience, so MIF is confident we know our business and follow the right strategy. However, we value the close relationship and our regular discussions.”
What advantages have they provided to you?
The main benefit for MPS of the MIF investment was the “body” behind the MPS company. As we are sell-ing capital equipment, some of our early prospects and clients had a concern about MPS continuity related to the maintenance and services to be pro-vided by MPS on that equipment. With MIF as part-ner this concern has not been raised any more.
What do you perceive as the next steps for your company?
Expanding and growing, organically and by looking for the right partnerships for specific regions. The number of sales is increasing, the cus-tomer feedback on the quality of our products is very good, so I see a very bright future with many products to sell. Given that aviation is predicted to double in size by 2030, this puts a real challenge to the training of a sufficient number of pilots and training methods are evolving, two opportunities where MPS can take advantage.