All with bailout money looted from the taxpayers
General Motors Starts Own Venture Capital Firm
DETROIT — General Motors Co. has set up its own venture capital company
with $100 million to invest in companies that are developing new
The automaker announced the formation of General Motors Ventures LLC in
a statement released early Friday, saying it wants to nurture
transportation technology and help bring it to market so GM has the
latest innovation available.
Jon Lauckner, now head of global product planning, will be president of
the venture capital company and remain a GM vice president, starting
July 1. He will report to Stephen Girsky, vice chairman of corporate
strategy and a GM board member.
The $100 million is an initial investment. GM says it already is
exploring a number of equity investments in auto-related technology.
The subsidiary likely will make small investments at first in startup
companies, said spokeswoman Sherrie Childers Arb. The structure of the
investments likely will vary, and GM Venture Capital could take
ownership stakes in some of the companies, she said.
No investments have been made yet, but the company hopes to do so very
soon, she said.
GM, which is 61 percent owned by the U.S. government, notified the
Treasury Department of plans to set up the subsidiary but did not ask
for permission, Childers Arb said. Funding for the company is coming
from cash generated by General Motors, she said.
GM nearly ran out of cash in 2008 and needed $50 billion in U.S.
government aid to survive a trip through bankruptcy court. It repaid
$6.7 billion of the aid, and the government is hoping to get the
remaining $43.3 billion back when GM sells stock to the public, perhaps
later this year.
Last month the Treasury Department hired Lazard Freres & Co. as its
adviser to prepare for an initial public stock offering.
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Recently GM's financial picture has started to improve. It posted net
income of $865 million in the first quarter – less than a year after it
emerged from bankruptcy protection.
On Wednesday the company reported May sales that were up 17 percent over
the same month last year. But more than a third of the sales went to
lower-profit fleet buyers such as governments and rental car companies.
Sales of its four remaining brands – Chevrolet, Buick, GMC and Cadillac
– rose 32 percent for the month. GM is phasing out or selling Saab,
Saturn, Pontiac and Hummer.
GM already has taken ownership stakes in two companies that are
developing ethanol fuel technologies.
In 2008 the company announced investments in Boston's Mascoma Corp.,
which is working to develop ethanol from wood chips, waste paper sludge
and switch grass. It also invested in Coskata Inc., a renewable energy
company based in Illinois that plans to produce ethanol from
agricultural leftovers and municipal and industrial waste.
The size of GM's stakes in the companies was not disclosed.
GM and other automakers such as Ford Motor Co. and Chrysler LLC have
pushed flexible-fuel vehicles that run on ethanol as an alternative in
the face of rising gasoline prices and tougher fuel efficiency standards.
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