Emerging trend for big business

There is an emerging and growing trend that more and more big companies are adopting. I recently read a report in the New York Times (click here to read it) about GM investing $100 million and starting a venture capital firm for start-ups in the field of renewable energy and other advanced technologies. This follows a similar strategy that Google and other large companies have been implementing over the last few years.

Google is probably the most experienced in this game, or at least their moves have been more public. For Google, the investments they made and continue to make don’t actually have much to do with their core business of the internet search engine and online advertising. They too, like GM are focusing on renewable energy sources and related technologies. GM on the other hand, would directly benefit from the start-ups they are looking to invest in and hope to implement them in to their future vehicles.

It would appear that this strategy makes more sense for GM than for Google and other large businesses that have begun to do this type of investing, but Google and the other companies that are investing in start-ups totally unrelated to their core businesses can still stand to gain. As a venture capitalist they don’t need to use the products and services these start-ups develop because they can limit themselves to a strictly monetary investment and make money on it like any other venture capitalist firm.

GM however, is looking at this strategy to potentially gain an edge on their competitors (none of whom are currently doing this). They are also trying to make their business seem more diverse and attractive for their eventual IPO. If I was an investor of GM’s, I would like this idea and would likely support it. $100 million is a lot of money, even though GM is a big company, but this strategy makes a lot of sense and allows them to dip their feet in potentially game changing ideas and businesses that will help them with not only their future product line but also with their branding and reputation.

As with the start-ups Google and others have invested in, I am excited to see what start-ups GM invests in and how those companies progress and grow. I might be even more interested in the GM investments than Google’s because it is easier to connect the dots to how GM will use the new inventions and innovations in their cars. This story may lead to some more interesting posts in the future, depending on how successful GM is with these investments.