The German carmaker plans to boost its investments in AI technologies that its ventures team predict will transform automotive manufacturing.
Automotive manufacturer BMW’s venture arm launched its third fund today, adding $300m to target artificial intelligence technology it says will change the face of the car industry.
“We very much believe AI will be a fundamental technology and therefore, a lot of things will build on top of it,” says Marcus Behrendt, one of BMW i Ventures’ two managing partners.
“Utilising this enabling technology to improve business processes, business software, business applications, materials, science – whatever is there to be improved,” Behrendt adds. “That’s why we believe it will have a very important impact on our venture investments going forward.”
BMW i Ventures was launched in 2011 and invests in startups in North America and Europe, supplying up to $10m per deal up to series B stage. The capital influx does not mean it will increase the cash it provides in each transaction, but it does intend to back more startups at seed stage, a decision driven by valuations for AI companies that tend to get very high, very quickly.
The newly formed Fund III will invest in both hardware and software AI, prioritising physical AI technology that will enable robots and other autonomous machines to operate in real-world physical environments, and agentic AI software that can automate workflows in industrial environments.
The unit’s most recent investment is an example of how AI fits into BMW’s everyday activities. Earlier this month, it was part of a $40m series B round for Synera, a creator of software that combines AI agent technology with a large pool of manufacturing data, allowing changes to be iterated throughout the design process without making mistakes or producing inconsistencies.
For a carmaker, that means the ability to change parameters to car designs across the development process in a matter of minutes, rather than the weeks it would take to manually coordinate data, design tools and internal approvals, radically shortening the development of new vehicles.
“It’s a technology shift similar to maybe the rise of the internet,” says fellow managing partner Kasper Sage. “We’re only just starting to scratch the surface of what this means for enterprise software, enterprise processes, organisational implications and so on.
“A lot of stuff is suddenly possible that wasn’t possible before because of the amount of work that would have had to go into it. Now, you can basically automate it away and focus on the stuff that is really interesting, which is – what does this do for our business?”
“We want to make a statement as a corporation here. We are committing to staying in the space.”
The new capital follows the establishment of BMW i Ventures’ Fund II in 2021 and brings the unit’s assets under management to $1.1bn.
The managing partners are proud of the fact previous funds have returned money, with exits including Intel’s $900m acquisition of mobility app developer Moovit and IPOs for Life360, Xometry and Solid Power. Sage points to other CVC units – which will remain nameless – that have backed certain technologies because a business unit may have expressed a need, only to find they’ve made a bad decision financially.
The fact BMW i Ventures has made a healthy return feeds into the other reason BMW has put up more money for a third fund. At a time when some of its peers have quietly toned down their early-stage investments, BMW is reiterating that corporate venture capital is still an area worth investing in for carmakers.
“Seeing many of the other [automotive CVCs] unfortunately pulling out of the corporate venture game, we want to make a statement as a corporation here,” says Behrendt. “We are committing to staying in the space.”
BMW i Ventures is not just looking at pure-play AI with the new fund, however. The technology also has potential uses when it comes to another area the unit looks at: advanced materials.
“We believe AI and the technologies evolving around large language models will accelerate the material space tremendously, just like they have in pharmaceuticals,” says Behrendt.
“So, we are very much monitoring that for materials – be it for batteries, vehicles or other things that might come out and help with the product or with production. There are a lot of critical systems in production which are consuming a lot of lot of materials building those products.”
Behrendt says some of the unit’s portfolio companies are already using novel materials in manufacturing. Those include Bcomp, which is replacing the carbon fibre used in motorsports and space vehicle production with natural flax fibres. But he says the biggest growth area for advanced materials is likely to be batteries, which still have the potential to last longer while becoming both lighter and more powerful.
Lastly, the unit is interested in manufacturing and supply chain technologies. The concept of a circular supply chain where materials are recycled was largely pioneered as a way to cut carbon emissions, but as rare earth minerals have become an ever more important part of car production, maintaining a supply chain of those elements has become crucial.
BMW i Ventures’ portfolio already includes rare earth minerals recycler Cyclic Materials and Mangrove, which uses electrodialysis to refine lithium more cleanly, and it is looking for other technology breakthroughs in the same space. If BMW can reuse available minerals, the company does not have to mine or refine them, while making its supply chain more resilient. It’s one more way the unit can demonstrate its value.
“It’s never one single factor,” says Sage. “Investing just because it reduces the carbon footprint is often not what really drives change. You want something that’s better and cheaper. Because if it’s cheaper at scale, it will allow people to adopt it. It really only makes an impact if it gets deployed. It doesn’t change anything in the lab.”
See all of BMW i Ventures’ recent deals on the CVC Funding Round Database
