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Volvo launches tech fund to invest in startups, doubles down on tech

Volvo is trying to hook them while they're young, getting involved with tech startup companies at earlier stages to maximise its investment.

Steven Ewing/Roadshow

Volvo Cars is no longer content with letting tech startups come to it, so it is going out into the world and investing in promising companies with its newly formed Volvo Cars Tech Fund.

Part of what makes the Volvo Cars Tech Fund cool is that working with Volvo will allow small companies to validate their technology, taking it out of the realm of the abstract and putting it into an actual vehicle with manufacturer support.

"We seek to invest in companies that can provide us with strategic access to new technologies, capabilities and talent," said Zaki Fasihuddin, CEO of the Volvo Cars Tech Fund. "By supporting promising young firms at the forefront of technological development and providing them with both capital and strategic value, we aim to strengthen our leading role in the industry's technological transformation."

For Volvo, this is a much more cost-effective way of gaining access to cutting-edge technology earlier in its development stages than would have been possible in the past. The downside to the Tech Fund is that it brings with it more risk.

"We work closely with promising technologies, and when we see value creation potential for us as a user, we can now also invest to help accelerate the venture," said Mats Moberg, Volvo Cars Tech Fund board member and vice president for research and development at Volvo Cars.

The first investment that the Volvo Cars Tech Fund is making is in a Silicon Valley company that is producing advanced sensors. The fund is also seeking to work with companies on mobility apps and services, distributed machine learning/artificial intelligence and storage, safety and security, networking and connectivity platforms, fusion and HD mapping, sensors and drive computing.

The rationale behind the Tech Fund certainly has merit, but given the limited amount of information the company has been willing to divulge, which has not included the size of the fund itself, it's hard to say precisely how much of an effect it will have.