Two to three years ago, tech companies had a "very arrogant" attitude to traditional automakers, as if to say "you are already dead and you just don't know it."
More recently, this attitude has changed, as tech companies realized that building a car is not the same of building a smartphone. "They still look at carmakers with arrogance, but a little less so than in the past," Schwarzenbauer said.
Working with startups is helping BMW to reinvent itself from a premium car manufacturer to a premium mobility service provider. "We are deciding today the vehicles that will hit the road in seven years and, with an average life cycle of seven years, will still be on the road by 2030, so a lot of imagination is needed," he said.
To leverage fresh ideas, the automaker has three different companies to help startups: BMW i Ventures, BMW Startup Garage and Urban-X.
- Silicon Valley-based i Ventures is a traditional venture capital company providing early and mid-stage investment in startups that are focused on the urban mobility needs, both on the technology side and in the customer and service areas. The company invests $1 million to $15 million per investment in startups, helping them to grow to an initial public offering or a private share sale. BMW's i Ventures has stakes in 26 companies, including the moovit public transport app and just park app.
- Munich-based BMW Startup Garage enables startups to build their automotive business by helping them put their products or services into BMW Group models. Normally, the Garage assists a startup for four months, buys from 2 percent to 5 percent of the company and pays for a pilot program. This also ensures that BMW is its first automotive customer.
- Urban-X is run by Mini and is a New York-based accelerator for startups that re-imagines city life. It assists 20 projects a year, helping them to develop their ideas on a global basis with a capital injection of $100,000 for a 1 percent to 10 percent stake into the company. Founded in 2016, Urban-X has supported 80 startups, of which 11 are still active.
BMW's i ventures, Startup Garage and Urban-X all work as startups and have full operational freedom. "Speed of action is crucial and to be quick you need to be free," Schwarzenbauer said.
EDITOR'S NOTE: An earlier version of this story misstated the sums i Ventures invests in startups.