Corporate VC from Magna, the largest company you’ve never heard of ($32bn in revenues last year).

Ian Simmons
Ian Simmons – Vice President – Business Development R&D, Magna International
This is an excerpt from ‘Venturing and the Future of Mobility and Automotive Technology’, a new report from Global Corporate Venturing and LEIF, which is sponsored by Denso International AmericaCastrol innoVentures and Magna International. The report will be released late in November ahead of a conference of the same title in London on December 1st, where Jonathan Tudor of Castrol innoVentures and Ian Simmons of Magna are among the speakers. If you’re a new mobility and auto-tech businesses that would like to present at the conference and /or appear in the report, please contact please contact tom.whitehouse@london-eif.com.

With $32bn in revenues last year, Magna International, global automotive supplier, is probably the largest company you’ve never heard of.  Its OEM clients range from Aston Martin to Ford and just about everyone in between. Its product range is equally diverse, from electronics to chassis, drive trains and seating. The chances are that many, if not most, of the parts of the car you drive were made by Magna. It manufactures from over 312 sites globally, employing 155,000 people. Ian Simmons, a Brit who began his automotive career as a mechanical engineer with Ford in the UK nearly forty years ago, is charged with running Magna’s “all-tech” venturing strategy which is designed to keep it in the vanguard of automotive design and manufacturing. He drives a Ford Edge and a BMW 335i, and for fun, a 1980 MGB and 1973 Triumph TR6.

Tom Whitehouse: Ian, please explain Magna’s venturing strategy? 
Ian Simmons: It’s simple. We’re looking at early stage technologies that could compliment or enhance Magna’s current product portfolio. So we’re a strategic partner not a financial investor. And bearing in mind that we have a very wide product range, our appetite for new technology is very broad. In addition, we look outside of the automotive industry as well because innovations we may need are just as likely to be found in medical, aerospace and software.   I want the venturing and innovation world to understand that Magna is an active player in the transformation of the vehicle and the automotive landscape in general. We are very much open for business.

TW: Please give me some examples of what you mean by going outside the automotive industry
IS: Many of the ‘light-weighting’ composite technology and materials used by the automotive industry today initially came from aerospace. The biometric security technologies that we are increasingly exploring initially came from the medical industry. And as connectivity increases in transportation, the technology required for cyber-security and the effective use of big data is coming from the software industry. We are now an all-tech industry and Magna has an all-tech venturing strategy.

TW: That’s an ambitious and demanding strategy. How do you source investments?
IS: We manufacture all over the world so we have a global footprint which we have used to cultivate relationships with the best universities, venture funds, start up community and accelerators, and even with individual innovators.  We’ve invested alongside other VCs and accelerators to increase deal flow. For example, we recently backed companies in Israel, Canada and US. We also seek innovation internally, not just through traditional R&D, but by challenging our employees to generate new business and technology ideas. And we co-invest too of course. We are increasingly our venturing efforts and you’ll hear more about them in due course.

TW: Let’s focus on disruption in the automotive sector. I’m talking about car sharing, electrification, connectivity, autonomous vehicles, and the demand for ‘mobility as a service’ etc. It’s going to be a hell of a shake-up.  As a tier one supplier to the OEMs, do you feel less vulnerable to this disruption than the OEMs themselves?
IS: Not really. We’re happy that our markets are growing and we have more customers.  We certainly expect more vehicles to hit the road, particularly in Asia, in the short and medium term even as new industry players enter the market and traditional automakers adopt new business models and evolve. But (and it’s a big ‘but’) the very same disruptive forces impacting the OEMs also affect us, particularly in the heart of our business – in how we design and manufacture.

TW: Please give some examples of the impact at the design and manufacturing level.
IS: The connected and autonomous vehicle is going to need much greater computing power and generate a lot more data. So a vehicle’s electrical architecture may have to be completely changed. And if vehicles are getting more usage because they have multiple owners, that’s going to force some radical changes too. Today, cars in many urban and semi-urban environments might be used for ten hours per week. If they’re going to be consistently used over ten hours per day, then they’re going to have to be designed differently and made differently. And we’re going to be making a wider range of cars – electric, hybrid, SUVs, SAVs, cross-overs. Our product is going to become more and more complex, with more features and functions. So we’re going to have to manufacture with greater flexibility, efficiency and advanced processes.

TW: So as a corporate VC, you’re as interested in innovations in the factory as you in the innovations that are on the road.
IS: Of course. Just like the car, manufacturing is now a part of the Internet of things, with all the same challenges and opportunities around analytics, security, computing power, robotics and machine learning. As a result of our global footprint (312 facilities), we can serve as a source of information and implement some of these technologies.  New models of transport and mobility are bringing changes to Magna’s definition of the smart factory which could enable new models of mobility. It’s a symbiotic relationship.

TW: Let’s talk about some of the direct venture investments you’ve made.
IS: There will be 50 billion items connected to the Internet by 2020 and this creates big security challenges.  A lot of personal information will be going through your car. We invested in Argus Cyber Security because car users will expect their vehicles to be protected from cyberattack just like their other smart devices. We believe that Argus is the world leader in this field.  We also invested in Zubie because it’s a pioneer in adding connectivity to the whole automotive supply chain, which is going to impact us very directly. Another investment is with Peloton, a company leading the way in introducing autonomy to transportation, starting with trucks and haulage.  We don’t manufacture extensively for trucks, but by investing in Peloton we can learn how autonomy is likely to be adopted in mobility overall. The venture firms we’ve backed extend our pipeline of potential investments and provide a window on innovation across several industries.

TW: At the moment, Magna is seen as ‘the largest companies in the world that no one has heard of’. Do you think this will change? Will you ever become a consumer-facing brand?
IS: No, we will not have a Magna branded car. My job is to make sure that the best technologists and innovators know Magna, our value proposition and know of our readiness to partner and invest.  We have an unrivalled track record in technology commercialisation so we can be a very good corporate venture and technical partner for early stage businesses. Magna International will be ready for whichever way the automotive industry evolves.

TW: What do you drive?
IS: A Ford Edge and a BMW 335i, and for fun, a 1980 MGB and 1973 Triumph TR6.

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