GM taps 500 Startups to find early-stage investments in upcoming classes

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GM has made a number of big acquisitions and investments in the past few years. It picked up self-driving company Cruise earlier this year and dropped $500 million into Lyft, Uber’s biggest competitor. For the most part, GM acknowledges that it needs to figure out how to tap into new aspects of the automotive experience, CTO Jon Lauckner said.

But all these companies start somewhere. And GM is looking to find them early on in addition to the big investments they already make. So GM is now going to work with 500 Startups to track down a batch of companies within each class that it will make early investments in order to continue to expand its touch-points beyond the areas it’s currently working.

For all intents and purposes, GM is going to be seeking out 5 companies within each batch to make investments with 500 Startups. The firm is currently working through its 19th batch of companies, and a partnership like this could also help it further differentiate itself from other accelerators. In fact, 500 Startups recently entirely dropped the “accelerator” brand in an attempt to further differentiate itself. So while this is of course good for GM to get access to the 500 Startups pipeline, it’s good for 500 Startups to also find more added value it can provide to its batch companies beyond its marketing and growth help.

Working with a firm like 500 Startups — which has seen hundreds of companies go through its program — can give GM access to a big pipeline of companies and the firm’s extended network to find new potential investments. 500 Startups works to find plenty of companies that are outside of domestic markets.

The investments won’t necessarily be a joint investment, 500 Startups’ Dave McClure said — so while 500 Startups is taking the usual terms, GM will be taking on a separate seed investment. And the intent for GM is to continue to follow those companies along to make more traditional later investments it normally makes.

The investments aren’t going to be fully restricted to the typical automotive areas that you might expect. That could expand to infotainment, machine learning startups, and other kinds that might provide some kind of parallel or perpendicular support to GM’s core businesses. With these kinds of investments normally come opportunities to get access to partnerships — or even acquisitions — down the line as it builds a support network for early stage startups.

The intent is to give those startups access to mentorship in addition to what they’ll typically find through 500 Startups. Of course, the magic number 5 isn’t necessarily a hard-and-fast rule, Lauckner said. If there are more companies that fit the bill that GM is looking for, they’ll be strong candidates for seed investments.

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