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Friday, June 4, 2010

GM Creates Venture Capital Subsidiary

General Motors today said it has established General Motors Ventures, LLC, a subsidiary designed to help the company identify and develop innovative technologies in the automotive/transportation sector.

Leading the initiative will be Jon J. Lauckner, who is named GM Vice President and President General Motors Ventures, LLC, reporting to Stephen J. Girsky, GM vice chairman Corporate Strategy and New Business Development. Lauckner’s new position is effective July 1, 2010. He was GM vice president of Global Product Planning.

“We are constantly looking for ways to deliver the best technology for our customers,” said Stephen J. Girsky, GM vice chairman Corporate Strategy and New Business Development. “Our goal is to nurture these innovative technologies to help bring them to market, and to ensure our customers have access to the best technology available.”

General Motors Ventures, LLC, has been funded with an initial investment of $100 million, and is currently exploring equity investments in a number of auto-related technologies and business models.

GM plans to invest $1 million to $10 million each in early-stage technologies that could eventually be incorporated in its line of vehicles. There’s also the possibility of a financial upside to boot, said Jon Lauckner, head of the new venture group.

Q&A With Jon Lauckner

Q: What is the objective of this new initiative?
A: It fits into the larger theme of design, build and sell the world’s best vehicles. Technology is definitely a big part of that. The new venture capital activity means investments in technology and business models that will give us a competitive advantage.

Q: Do you plan to seek out technologies that you feel are currently missing from your development, or will you just see what comes your way?
A: It’s going to be a combination of both. Clearly what we’ll do is leverage our organization, we know what we are developing in-house, we know where the gaps are, we know what’s on the horizon. It gives us leads on what we want to look into. We also hope people will approach us with ideas that are not even on our radar screen yet.

We also developed a lot of IP (intellectual property) in-house. There may be an opportunity to monetize some of that IP. It could mean spinning out companies, but more likely licensing, where we try to take the IP we’ve got and create some better value around that. We’ve done that selectively in the past, but it hasn’t been an organized activity.

Q: What technologies are you most interested in?
A. These are all automotive or automotive-related technologies. There’s obviously a big space around propulsion and emissions technologies. Then there are those that fall under the umbrella of infotainment, or the user experience in the vehicle, as well as the whole space and comfort and convenience in the vehicle. Finally, there are unique technologies to the electrified vehicle that would be very interesting.

Q: Do you plan to be the lead investor in venture rounds or go in as part of syndicates?
A. We are open to both alternatives. It may make sense in certain cases to lead, and in some to co-invest.

Q: What will you offer besides the equity?
There are three sources of value we can offer. Number one is the investment, but that’s not unique. Then there’s the business relationship. We’ll keep an eye on what can be commercially viable down the road, and we can put some volume behind that fairly quickly. The final piece is we’ve built some tremendous facilities; our battery lab is probably the largest in the U.S. We can offer access to facilities and people that would be cost prohibitive or very difficult to replicate for a small company.

Q: You’ve invested in a number of companies in the past years, albeit not as part of an official venture arm. Will these be rolled into this portfolio?
A: We’ll probably pick up some of the things that are already out there. We have some small equity investments in Coskata and Mascoma, and we’ve also got an equity investment in Quantum [Fuel Systems Technologies Worldwide Inc.]. Now they are one of the folks on the ground floor with Fisker [Automotive]. We’ll do a fairly thorough inventory of what we’ve actually got, because after our trip through the [bankruptcy] court it’s not clear what happened to all that.

Q: How soon should we see you make your first investments, are you already evaluating deals?
A: We’ve got some things that are cooking, but I can’t give a date certain when we’ll move.

Q: The initial investment of $100 million, is there a timeline attached to this?
A: The idea is to grow the amount. It’s an initial investment, and then we’ll see how things go and will need to go back to the board of directors.

Q: Who’s part of your investment team?
I’ll be working for Steve Girsky [vice chairman and vice president Corporate Strategy and New Business Development.] He already has a small team in corporate strategy and new business development that we can draw on. That team is well-versed in traditional business development and M&A. That’s a nucleus we can draw on. We’ll selectively build with folks inside and outside the company. We’re going to keep it relatively small.

Q: Do you expect that some or many of the technologies in which you invest will eventually be acquired by GM?
A: I really can’t say.

GM Media release

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