GM Ventures Alum Breaks Out on His Own With New Transportation VC
Sherwin Prior, managing director of GM Ventures since it was formed in 2010, has left the corporate venture in order to form his own transportation-focused venture firm called Blue Victor Capital.
Prior left GM Ventures at the end of last month.
While at GM, Prior helped the OEM invest in Turo, Lyft and Cruise, as well as oversee exits with speech recognition specialist Maluuba, iris recognition technology provider Delta ID, chemical producer Sirrus, battery technology developer Sakti3, automotive software producer OpenSynergy and geolocation software developer Telogis.
“From the beginning, we wanted to differentiate our offering, but we also recognized that this was a new opportunity for GM,” Prior told INV Global, adding, “What we were trying to do was jumpstart innovation, as applied to commercialization.”
But now, he’s ready to move onto his own thing, having recognized the even wider possibilities for certain investments and limited partnerships. Prior spoke with INV Global about the new venture and what he plans to bring to the ecosystem.
This interview has been lightly edited and condensed.
INV Global: How did you help establish the investing strategy for GM Ventures?
Sherwin Prior: American car companies suffer from a perception deficit. So, at GM Ventures our thesis was kind of clear: could we invest in technologies that could lead to more incentives and higher residual values? What that meant was that we focused on in-vehicle technologies, so 75% to 80% of our investments were things that would resonate with the customer whether they knew it or not. My best example is batteries in electric vehicles. A customer doesn’t care whether it’s lithium-ion or metal-cobalt, but what they care about is the extended range, and so that’s the pursuit we had for the last seven years.
It was clear in 2010 that the auto industry would be forever changed. Now what that means is, historically, the auto industry views itself as a pie divided amongst the major automakers. But by 2010 and 2011 we had companies like Coda, Fisker, Tesla, Google, Apple — everyone was working on vehicles or vehicle-type products, so it became clear that we needed to view transportation not as a pie, but as a continuum. So, strategically, we began to wonder and pursue, ‘how do we get some percentage of every dollar spent, for every mile traveled?’ So we looked at a number of things, whether it was bus companies like Protera; we looked at electric bike companies; we invested in RelayRides — now called Turo in 2011.
And GM to its credit left us alone to do this. We had oversight through an investment board, but we were really trying to disrupt the industry very early…To this day, we are the only ones really investing on a regular basis as a venture investor in these hardcore vehicle technologies.
INV Global: Tell us about the new venture firm you have established, Blue Victor Capital.
Prior: Between 2010 and 2015, [GM Ventures] was successful with co-investing with the likes of Kleiner Perkins, Sequoia, and others…But what I saw happen was that no else was really interested in the venture capital community in investing in the automotive space. The predominant reason is because time-to-revenue is very long and in [Silicon] Valley, they prefer these software deals and quick exits. So, as I get to 2016, frankly, GM changed the game when they acquired Cruise. What then happens is investors do what they always do, and they flock to areas of strong returns…and they looked at urban mobility, autonomous vehicles, the automotive market and transportation in general as now investable…So what I see in the marketplace for Blue Victor Capital, is an opportunity to pursue transportation in a broader form. A lot of these technologies translate to more than just automotive; one example is the aerospace industry, where they need to reduce weight just like [auto] and bring mobility and connectivity into the aircraft. I see insurance companies that want to get that car data to get better-insured experiences and they also want a way to connect to the customer. I see the same thing in the energy sector, that’s beginning to realize they have a role in the electric vehicle grid. Even oil and gas companies understand they are being fundamentally disrupted, so they are looking for ways to partner.
INV Global: How many people are involved in Blue Victor Capital and what is the size of the first fund?
Prior: Initially, Blue Victor Capital will have two partners…Now, what we are going to do a little differently in the fundraising process — [typically,] you have to go to potential limited partners and you ask them to invest in your fund for a specific purpose. But we are focused on getting clusters of corporates. So if you think about the auto industry, there’s still a few players and the supply-base especially, who are interested in tapping into the ecosystem. There’s also the insurance and energy industries. So we are going to reach out to various corporates and strategics that are interested in finding a way to participate in getting some of the deal flow and integrate some of these technologies. So what we are looking to do is have a base of LPs that are predominantly strategic in nature; we see an opportunity to go out and look for [a] $150 million fundraise from these parties. We do already have one that is interested, particularly in being an anchor.
INV Global: Where will you focus, geographically-speaking?
Prior: We are predominantly focused on North America, however, our fund and partnership agreement does provide us the ability to have up to 20% of our investments that will be non-US based. And that was important because there is an awful lot of fantastic technologies out of Israel and I have seen Europe emerge as a contender for technologies over the last three to four years.
INV Global: Where in the growth cycle are you investing?
Prior: What we are really looking to do is be a later-stage fund…We aren’t going to dabble a lot in Series A or Series B. We are going to be more focused on growth-stage entities. That means we are going to probably have a bigger check size, of $10 million or more.