BMW Rolls Out First Venture Fund

Buried in the recent announcement of BMW Group’s foray into electric cars was a significant bit of venture news: The Munich-based automaker also announced that, like General Motors and Ford, it is launching a venture capital fund—BMW i Ventures.

But unlike its peers, BMW’s venture arm won’t act as an extension of its in-house research and development arm. BMW i Ventures will back a very specific type of startup, a type that has nothing to do with manufacturing vehicles.

Joerg Reimann, managing director at BMW i Ventures, says the $100 million fund will focus on mobility-related startups that function independent of owning a car.

“We want to find companies that are connecting data of different levels of transportation—from car-sharing to cabs, to navigation to finding parking spaces,” Reimann says. “Everything that goes along with facilitating the integration of mobility framework is of interest to us.”

While BMW i Ventures’ investments in non-car-related mobility services might eventually lend themselves to automobiles, that’s not a requirement for investment. BMW currently offers in-car navigation services, but it hopes to complement that information with data from potential investments and deliver them to drivers in a way that’s accessible outside of the car. “Our approach is not to find ideas or apps that are only available for BMW customers,” Reimann says.

The end game for BMW i Ventures’ investments is not ultimately an acquisition, but a relationship. The company’s investments will range from minority to majority stake investments, and the relationships BMW i Ventures builds with its portfolio companies could lead to BMW’s brand being exposed to new customer segments, Reimann says. BMW also hopes to learn about consumer habits from its consumer-facing portfolio companies.

Like a growing number of other venture funds, BMW i Ventures has set up shop in New York, home to a number of location-based startups, including popular check-in service Foursquare. (See last month’s cover story, “If I Can Make It There.”)

“Clearly we’re interested in innovative ideas on the West Coast and ideas coming out of Europe and Asia, but the first thing that will keep us busy is exploring ideas in New York,” Reimann says. New York is one of the most complex urban environments in the world, he adds.

Another big selling point on the firm’s Manhattan home base is the city’s BigApps contest, which generates a wealth of location-based investment targets. Now in its second year, the NYC BigApps contest awards cash prizes to developers of software applications based on New York City’s open data mine. Winners from 2009’s BigApps contest included Wayfinder, an augmented reality app designed to help Android phone users find the nearest subway station, and Taxihack, a smartphone app designed to increase communication between New York City taxi drivers and riders.

“Last year we saw a lot of innovation come out of the contest and we will be jumping on the interesting winners of this year’s contest,” Reimann says. (Voting for the 2010 BigApps contest closed on March 9, but winners were not announced by VCJ’s press time.)

Of course, BMW i Ventures won’t rely on the contest as its only source of deal flow. On Feb. 25, the firm did its first deal: MyCityWay, a New York-based startup that makes an app that provides information on public transportation, parking availability and local entertainment. The fund joined with existing investors FirstMark Capital and IA Ventures in a $5 million round. FirstMark and IA previously invested $1.3 million in MyCityWay last year, according to Thomson Reuters (publisher of VCJ).

Clearly we’re interested in innovative ideas on the West Coast and ideas coming out of Europe and Asia, but the first thing that will keep us busy is exploring ideas in New York.

Joerg Reimann

MyCityWay, founded in December 2009, plans to use the capital to expand beyond its 40 city versions in the United States, adding 40 more locations worldwide.

BMW i Ventures considers MyCityWay to be a relatively mature investment and plans to look at very early stage companies as well, Reimann says.

FUND PROFILE: BMW i Ventures

www.bmw-i-usa.com/en_us/i-ventures/

Founded: 2011

Location: New York City

Fund: $100M

Team: Includes Joerg Reimann, managing director.

Investments: MyCityWay, a New York-based startup that makes an app that provides information on public transportation, parking availability and local entertainment. BMW joined with existing investors FirstMark Capital and IA Ventures in a $5 million round.

Did you know? BMW Group (BMWG.DE) reported record revenue and profits in 2010. Revenue climbed by 19.3% to €60,477 million ($80,687 million) from the prior year and net profit soared more than 1,400% to €3,234 million ($4,603 million) from one year earlier, according to the company.

Source: VCJ reporting