Leftlane reported just Monday about General Motors’ $7 billion-a-year budget for internal research and development, but what wasn’t included in that figure was a special budget that goes towards what is essentially external research and development in the form of venture capital actions.
While it pales in comparison to $8 billion, Reuters is reporting that GM has allocated $200 million for the next three years in order to find, fund and benefit from the developments on young start-ups outside of the automaker that may one day produce valuable technology to be used in GM products.
One such example would be the recent $7.5 million investment into Sunlogics, a firm that develops solar charging stations. While there is no particular technology that GM has its eyes on today – or at least not that it is disclosing publicly – the hope is that the general technology will potentially have an automotive application in the future that wouldn’t likely have been developed by an automaker, no matter how large an R&D budget.
“We’re buying options on future R&D,” said Steve Girsky, GM’s vice chairman and a former New York investment banker who spearheaded GM Venture’s creation. “It encourages people to take risks around here,” he added. “It encourages us to look outside of GM. You can only do so much with your internal R&D.”
GM Venture to lead a revolution?
Only time will tell, but that’s the general idea. “There was a period when GM was remarkable in terms of the innovations we generated – not only the sheer number but the impact,” said Jon Lauckner, head of GM Ventures. “That fell away over the past 20 or 30 years and now it’s time to crank that back up again.”
Because of the unique and very different nature of specialized start-ups and small ventures, innovative and outside-of-the-box ideas often abound, something GM hopes to hold true at the firms it decides to back financially in hope of future payback.
Of course, with any investment, there is always an element of unknown and risk – something GM is planning on, “When a couple of these (investments) start to fail,” said Girsky , “no one’s going to get shot around here.”
References
1.’UAW chief endorses…’ view
