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and to do this in 100 cities globally over the next five years.
However, the parent BMW Group "is still very much in the
experimentation phase with regard to what is the business model
around cities," so URBAN-X provides "a look around the corner,
with respect to real life operating conditions in cities," he says.
Besides URBAN-X, BMW Group runs a more traditional
investment outfit in BMW iVentures, plus a collaboration
wing in BMW Startup Garage.
iVentures, a $370 million VC fund launched in 2011, focuses
on consumer-facing mobility services and is co-located with
the BMW Group Technology Office in Mountain View, CA.
But five years later the mandate was expanded to encompass
technology startups that could help BMW manufacturing and
sales, too, says managing partner Ulrich Quay. It now has
investments in 40 companies spanning seven sectors, "reflecting what the company is doing today and will do tomorrow."
But with an average of $5-$10 million invested in each company, iVentures looks for "world class startup companies that
disrupt existing businesses," have "certain maturity," and "help
generate a lot of opportunity for BMW," Quay says. The motivation, he says, is both financial and strategic.
Meanwhile, Startup Garage's mandate is strictly strategical.
Founded in 2015, it is only collaborative with the goal of taking
a startup's already-developed technology and creating a proof of
concept (POC) with it, for integration in BMW vehicles. Startup
Garage makes no investment and takes no equity in stakes in
any of the companies with which it
works, but rather relies on VCs like iVenThe fundamental question is, what
tures or accelerators like URBAN-X to
will an automotive company be in
have already played in that sphere.
It started with three POC projects but
10, 20 or
now
works on 25 per year, across 20
Urban Us has joined with the automaker MINI - owned
100 years?
research fields. Roughly 60% to 70%
by BMW - to operate URBAN-X, a technology accelerator
are software-oriented engagements.
(also based in Brooklyn) that targets companies focused on
Most are in Germany, and the rest are in
working, living and getting around in cities in a sustainable
the U.S., Israel and Asia.
and resilient way. "We're not building a strategic funnel for
"We would like to flourish with startups. We want to bring
BMW," Baptiste says. "There's a much more mission-driven
their innovation to market. It is a supplier-client relationship,"
alignment with BMW/MINI that prompted the decision for
says Bernhard Schambeck, head of Startup Garage, which is
us to shape our fund into this direction, and for them to
based at Garching, a city north of Munich, Germany where
shape their innovation efforts into our direction."
technical and scientific research companies predominate. "Our
While BMW sees the same changes in the automotive
industry is changing in many ways. There are a lot of technoand mobility industries other automakers do, they're doing
logical challenges in terms of electrification, autonomous drivone thing different, Baptiste says: focusing on shifts in
ing, connected cars and so on," he says, adding that these
other, city-related industries that might produce value for
startups directly help BMW overcome those, gain a competithem. "This is all thinking decades ahead, about what's
tive advantage, and be faster to market with innovations.
important in the city in the future."
That precludes sharing its startups' POCs with other
"The fundamental question is, what will an automotive
automakers, but Startup Garage does look to competitors'
company be in 10, 20 or 100 years?" says Micah Kotch, manVC arms for candidates. "They have an interest that their
aging director of URBAN-X. "It's not enough to say they're
startups can scale," Schambeck stresses.
going to be mobility companies. "It's a question of scope and
So as technology continues to change the world, autoambition and the kinds of bets that a company can make."
makers and startups are forming innovative partnerships
URBAN-X's ultimate purpose, Kotch says, is to "help the best
that bear watching.
founders in the world who are reimagining city life to level up"
world's largest syndicate of transport corporations, from
every segment of the value chain," Garcia says.
"It's known that urbanization rates globally are increasing,
so innovation has to change how people get access to mobility," says John Suh, vice president of the strategy and technology division of Hyundai CRADLE, the corporate venturing
arm of Hyundai, based in Menlo Park, CA. With branches
also in Tel Aviv, Beijing and Berlin, it invests "off the balance
sheet" of its parent automaker, which is its primary funder.
And since its creation in early 2017, it has funded 30 companies, concentrating on five major themes, Suh says: artificial intelligence (AI); robotics; smart city; smart mobility;
and eco-friendly energy (battery and hydrogen fuel cell technologies). AI and smart mobility are preeminent, and
CRADLE has a five- to seven-year timeframe for integrating
a startup's tech into a Hyundai vehicle or, if it is software,
one to two years to migrate it into the cloud, he says.
"Every investment we make has to have a strategic fit," Suh
declares. But CRADLE doesn't always invest alone. For
example, he notes, it has co-invested in startups with Toyota's
VC arm, called Toyota AI Ventures, as well as with Kia.
Automakers aren't necessarily investing in startups just
for pure self-interest, says Stonly Baptiste, co-founder and
partner at Urban Us, a Brooklyn, NY-based VC firm that
specializes in smart
city technology.

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i3 - September/October 2019

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