Corporate Radar for Tomorrow With Jaguar Land Rover's InMotion Ventures Managing Director Mike Smeed

Fred Schonenberg
Hello everyone and welcome to the VentureFuel Visionaries podcast. I'm your host, Fred Schoenberg. I am so excited today to welcome Mike Smeed. Mike is the Managing Director of InMotion Ventures, which is the corporate venture capital arm of Jaguar Land Rover. 

So, Mike leads a fund focused on identifying, investing in startups that can accelerate innovation across mobility, climate, industrial and enterprise technologies. And before he entered VC, he spent more than two decades in global finance and operational leadership across Jaguar Land Rover, but also Walgreens Boots Alliance. And that combo gives them a very unique perspective on how large enterprises evaluate, adopt and scale startups and emerging technologies. 

InMotion Ventures sits at this very fascinating intersection, startups and one of the world's most iconic automotive brands, multiple automotive brands actually. And as AI is continuing to reshape industries, Mike's been helping to define how CVC can support that next generation and not just through funding, but also strategic partnerships, real world deployment opportunities and the patient capital that's needed to move from experimentation to enterprise scale adoption.

So today's episode, we're gonna dive into everything from the evolving role of CVC to AI, to maybe how that AI is different from previous investment cycles to what startups misunderstand about working with large corporates. So I know you'll enjoy this episode with Mike. Mike, welcome to the show.

Mike Smeed
Hi, Fred, thank you for having me on.

Fred Schonenberg
Besides having the coolest background behind you with these photos, I am so excited to talk more about the work that you're doing. Maybe for those that haven't been exposed to InMotion Ventures, can you give us a little bit about the mission and what you're focused on?

Mike Smeed
Yeah, of course. I mean, before we start, I need to make sure that all those photos are straight. I need to have a line there. Yeah, I mean, you pretty much covered it in the introduction. I mean, our role as the venture capital arm of Jaguar Land Rover, JLR, is to invest in exceptional startups that are gonna help accelerate the strategic transformation of our parent company. 

It's a relatively simple mission. And it was actually the very first line we wrote when we rewrote our thesis back in the autumn of 2022 so kind of almost four years ago. As you mentioned, we see that very much being in the climate, industrial and enterprise technology spaces. And we do that through our team of four based in London covering the UK and Europe. We have a colleague, Will, based in the Bay Area covering North America, and Maria based in Tel Aviv in the Israeli ecosystem. 

So between kind of a very small team that we have, trying to cover those main areas where we're seeing the most exciting and emerging technologies that, again, our company can make use of in its transformation. Because as I'm sure we'll get into later on, there's quite a lot going on within the automotive industry right now. And it's a really critical role that myself and the team are playing.

Fred Schonenberg
What drew you into corporate venture capital? Like how did your journey get into this space? What excites you about it?

Mike Smeed
I mean, I suppose I've worked in, through my career, I've had the opportunity to work in Geneva, in New York, in Frankfurt, in Shanghai and in London, but never for a bank. And I suppose during that time, I was almost destined to be involved in some form of investment somehow. And as you mentioned, when I was at the Walgreens Boots Alliance, our role was more in the private equity space. So how could we take brands that had very strong provenance in the UK, where Boots is very famous for its front of store beauty offering. And then how could we take that into Walgreens in the US? So very much looking at established brands in that space.

And I suppose through my career, I've enjoyed and been relatively successful in being not right in the core, but on the periphery of a large organization. So whether that was working in a manufacturing facility, whether it was working for a division or a joint venture, being that translator between the parent company's goals and a high gross division or a separate arm of that core company. So I suppose in some way that's held me in good stead in this role.

But if I'm honest, like probably many of my peers who more recently in corporate venture capital have not come from VC backgrounds, they've come from the mothership, they've come from the parent company. If I'm honest, probably about four years ago when I was in Shanghai looking for my role coming back to JLR, I didn't know what venture capital was. I didn't know what corporate venture capital was.

And that was what really excited me and continues to excite me to this day is every day you're learning something new and every day things are changing. The world that we operate in we think 2030, 2032 is done. We're working on the next thing and the next thing. And that's, I think, the most exciting part.

Fred Schonenberg
Yeah, it's very fun. Although it's kind of weird, I don't know if you experienced this, but like at dinner parties people get excited and they tell you the new thing they discovered and you're like, yeah, yeah. No, we looked at that like five years ago. You have to not be that person, right? 

Mike Smeed
But it's not just dinner parties, it's also with the parent company as well. We saw something in the Times or we saw something in this and it's just IPO'd or something. And you're like, yeah, yeah, you know. 

Fred Schonenberg
We actually showed that to you five years ago. 

Mike Smeed
Yeah, you hated it, yeah.

Fred Schonenberg
You said it was terrible. That's very, very funny. I think one thing I'd love to ask is, with your background sort of being, you used the word periphery, which I thought was really interesting. And maybe you can talk about some of those challenges with being the translator of what's on the periphery, whether that's established brands, whether that is a high growth business division that maybe is a little bit off the core. How are you able to, or VC in this case, how do you bring that back in to get the people that have been at the parent company for 20, 30 years and are at the top of the totem pole to think differently?

Mike Smeed
I would say that's probably one of the biggest challenges that we have doing these types of roles. I think, again, I've been very lucky in my career. I was in the finance profession and all the way through to the CFO of JLR's joint venture in China. And I've always had a foot in both camps. You've got a foot in the business team that you're a member of the leadership team for, and then also in the finance team as well. So you're always used to never being right. There's always a reason why someone thinks you're not doing the right thing. And I've always described working in CVC as being punched in the face from both sides.

If you're in the corporate, you're seen as kind of too risky. You're throwing these things in. What are you doing with all of these things? And then you go into the startup ecosystem and you're the corporate guy in the corner. It's like you never win. I have two teenage daughters and it's very serious parallels between these things. It's like, you might not thank me today, but at some point in the future, you're going to thank me for the interaction that we've just had. So I think that's... 

Fred Schonenberg
I believe that is going to be the clip we use to promote this, or at least the clip I go back and listen to, because getting punched in the face from both sides was hilarious and true. And then the teenage daughter parenting piece, right? Because you can't be their best friend. You also don't want to be a total disciplinarian. So you're kind of doing the same thing.

Mike Smeed
Yeah, completely. I think, and it goes into so many different areas and one of the most important things, and I think this is why we have seen, as I said, we've been doing this for almost four years now and we've definitely seen a more recent trend of people coming from the parent company to lead the CVC. 

We're seeing, and a lot of the people that you've had on your podcast as well have been people coming from venture capital backgrounds. And it's so, so important that as the maturity of CVC grows, and again, in Europe, I'm dialing in here from the UK, we're definitely behind our colleagues in the US. There's, without a doubt there, but that VC discipline, principals, investment directors, they're wired differently to corporate people. And I think we have to recognize that and we have to make sure that those are the right areas.

However, in a leadership position where, let's face it, you're paid to get punched, it's much more important that you've got the credibility from the parent company as well. And that's where the translation has to come from a place of strength, I would kind of describe it. So that the reason that you're doing something or the motivation that you have for doing something can never be questioned. So everyone knows you're coming with the right intent, you're coming with that view. And I think that's where, because I came from the finance leadership team of JLR, I'm now a member of our strategy leadership team as well. So I report to our Chief Strategy Officer.

Again, that comes with a level of credibility, of context, so that people know that when you, you're coming to them with a startup, because again, I think another really important lesson that we've learned is, large companies do not like working with startups, right? It's just a fact, they're not designed to do that. So being that thing, being the thing in the middle, and we call it, we are JLR's platform too, and we describe it as credibly and safely engaging with the startup ecosystem. And that has to happen from both sides. We've got to make sure that our parent company, the leaders in the parent company, are not being bombarded with a million and one things, that they're not being distracted. 

But at the same time, we have to provide a really, credible and governed path for a startup into that parent company as well, so that they can really understand how best we can get it. Because these things, again, to use a, going back to a car analogy, the gearing is just different. And if you don't have, and again, I believe a CVC plays a huge role in this, is providing that gearing between the two, so that these two things that don't naturally work together can work in sync.

Fred Schonenberg
That's very interesting. So let me ask you, I like the gearing analogy a lot. One of the things that I think is interesting, so four years ago, you did not have the VC background, but you did have the strategy finance periphery. And so I'm curious when this role started to come up from your leadership lens, from your strategy lens, why was the idea of working with startups interesting to you as an organization? 

And I think we shared this when we were talking before we recorded is that there's still a lot of Fortune 500 companies, very large organizations where I'll talk to the CEO and he's like, why would I work with a startup? I have a X hundred million dollar a year R&D team and I have my reasoning. But I'm very curious as you looked at it from within the leadership team, why did you say, you know what, we do need this credible bridge to the outside startup ecosystem?

Mike Smeed
Yeah, it's a great question. And I've thought about this a lot since, and again, with a lot of things, you always look backwards and try to join the dots, right? And for me, automotive, if I talk about automotive for a second, but I think it goes to a lot of OEMs or original equipment manufacturers, right? Is that we're getting stretched into areas of our value chain that we've never had to really get involved in before. 

So if you think about an automotive manufacturer, the traditional perspective was you designed beautiful cars, like the ones behind me, you then spoke to a load of big tier one suppliers and said, right, I need you to provide me with these parts. You assembled them, you sold them to a dealer network, and then the dealer network sold them to the customer. That was a traditional kind of, and maybe there was like a warranty for three, five years, whatever it was, but that was kind of where your work kind of began and end… ended rather. 

What's happening today is mainly through areas like regulation, but also the change in customer and client behavior, what they expect from brands. And I think that's necessarily within the automotive world, is that we're being held, automotives are being held, OEMs are being held accountable for much more than that. So if we think about what's happening in Europe, as an example, but also through a lot of the focus on ESG and sustainability, we've got to know where our stuff comes from. 

We've got to know, okay, so what is the tier one where it is going? And in Europe, for example, as in 2027, we've got what's called a battery passport. So for cars that have batteries within them, they have to have a passport which says where all the materials that went into that battery came from. And it's got to be right down to the original… the kind of source of it. And that's also moving into a broader product passport. It's moving into tires and all of those kinds of things. 

And that's being exacerbated by the geopolitics situation. Obviously rules of origin are becoming very important. We know that in a lot of industries, we've moved from a very global supply chain into one that's now very segregated, whether that's in the US, Europe, and in Asia. So therefore, we've really got to know further down our value chain where things are coming from in a way that we haven't before. But also the connect with the end customer or the end client becomes a lot stronger. The relationship that customers and clients want to have with the brand and what that brand stands for has also changed. So there's a real stretch going on. 

Now, there are a number of companies that are maybe big enough that could almost staff up to do all of those things. But the reality is that it goes beyond the core competence of many, many companies, including one that's within the automotive world. It's a very important one, but it's relatively small in automotive versus some of the really big players who are selling millions of cars every year. So therefore, if we wanted to do all of those things ourselves, then we would have an unsustainably large and cumbersome operation.

So it's almost by necessity, really, when you think about it. Where are the technology advances coming from? Where are the areas that we think and companies believe that their real USP is? Because you can't be amazing at everything. So what are the things that you need to be amazing at? What are the things that your customers or your clients expect you to be amazing at? What do the regulations say that you need to do? And therefore, with all the other stuff, you then start thinking, well, where can we move forward? Where can we develop? 

And as we all know, over the last 20 years, those large industry-defining and disruptive movements and technologies have come from startups. They've not come from legacy companies. So you wrap all that up together and you get to what I would say, CVC is not a nice to have anymore. It’s not a necessity for you to be able to have that radar on those real disruptive technologies of the future that at some point are going to come in either as an opportunity to you or as a threat.

I would argue that these things are moving much quicker than a traditional R&D kind of cycle would have. And also by engaging with startups, if I just give you an example, one of the startups that we invested in has got a number of PhDs, a number of incredibly entrepreneurial people in a particular area. The first thing is you could never ever hire those guys. They would never want to come and work for a large corporation. You couldn't afford them even if they did. So the fact that those guys can move so much quicker than we would ever be able to do I think is a great testament and is kind of probably number one on the list as to why we do invest. It's to access that type of technology that is really going to help shape the future of the company.

Fred Schonenberg
Man, I think this idea of the corporate radar on the future is so potent and powerful to think about it. And the stretch is interesting. I would imagine that the stretch also creates complications because you are not the full supply chain. So also when you find something that you think is very interesting, there's a certain coordination on that working because either you're going up to suppliers and folks you're working with or down towards the dealer customer level. How does that create a level of complexity that maybe other industries don't have to navigate?

Mike Smeed
Yeah, I think it is a really important one. I mean, if you look at again, the motivation for having a CVC unit, when you have let's say a component manufacturer is an example or an incumbent supplier with a CVC arm and there's lots of those they're looking for, okay, what's the next industry that's going to come up that I could be potentially a supplier into? 

So their motivation could be very different to our motivation, which is we want to be the user, the potential user of that technology. We don't want to be the customer of the customer of the customer of that. We want to have that direct impact on the parent company, the technology that our colleagues within the business can use. What you're describing here is almost, there's a real danger in all of that that you lose focus. So one of the things that we have done very well at the outset was get really clear on our thesis about what it is, like any venture capital would and a capital firm would do, get very clear on your thesis about the areas that we really want to go after.

And there's a very subtle difference between the types of things that your company thinks it should care about versus the stuff that it should care about. And again, and that's where there's a lot of those kinds of discussions on this new technology is coming, it's the area that we want to really after. And what we find is that not all, but some of the people that we work with in the corporation are very good at contextualizing things in the context of the organization of today, not necessarily looking at the organization about where it's going and in the future. And there's that real natural tension there, which I think actually is very, very healthy. 

Fred Schonenberg
It is very healthy. I mean, we had a moment, we did our sort of H1 review, and we were talking about a case with one of our clients where essentially we brought in the core to review some of the opportunities. And they all, like 100% of the internal core non-leadership killed something we were excited about and I basically said, we have to bring this to the C-suite. It is where the puck is going. And they killed it because it's not where the puck was. The CEO saw it and was like, that's the one. Like, I want that. I was like, I knew he would want that because his job is to look out, right? And to see what's coming. And it wasn't that I have a crystal ball. 

It was that their gears, their wiring was, can we commercialize this thing in the next six to 12 months? What is the scale, like all the reasons why something might not work, but those can be solved over time, right? If your customer's going this way, you've got to get there by the time they're there. I think that that's to that wiring and framing, but it's a good balance, right? Because there's stuff that I think is where the puck is going. And they all say no, and they're right because they know the realities of working with folks. 

Let me ask you a little bit more about that tension, I will say. When we have CVCs on the show, we often talk about strategic versus financial. It's sort of like the easiest question to talk about with every CVC ever. The answer is usually some version of both is usually where it goes. I'm curious, maybe one level down on that question. What about working with the startups that you invest in? That you've identified as, hey, this is where the puck is going. How do you help them integrate back into the core or find that opportunity for the core business to work with startups in some way?

Mike Smeed
Yeah, it's a really important point. And I think I'm with you on the financial versus strategic thing. I think it's becoming thankfully a really new part of the discussion. So if we kind of kill that now, which is that there are so few CVC units that I've met or know that don't care about the financial return, that they're almost like, forget it. It's just table stakes. We all know that in the industries that we work in, if you consistently lose money, then that isn't strategic. It's not strategic or financial to lose a ton of money.

On the other side, I think, and I heard a podcast the other day and someone talked about strategy used to be an excuse for making really bad investments. And I thought that was a great way of putting it. Now, I think the question needs to be the impact that you're having, not whether it's financial or strategic, because people put it on literally from left to right and say like, who's on the left, who's on the right. And of course, this is a big cluster in the middle and it becomes kind of irrelevant. I think what we focused on again is the impact that we wanna have both for the parent company. And as I said, very much, this is about investing in startups that can help the companies transform.

But then also from the startup perspective, how do we make sure that the experience that they have working with us is as positive as it possibly can be? Now, we've got 25 companies in our active portfolio today. 30% of them are working with JLR as a commercial customer or a supplier. There's 60, so that 30%, there's another 60% who are in some form of proof of concept or pilot or procurement hell. And then there's 10%, which are either companies that our strategic direction has moved away from, or in the case of our most recent investment, we just haven't put them into the kind of the process yet. 

So we've prided ourselves on that positive impact with the parent company. And we're not talking about theater here. We're talking about active engagement where we have millions of pounds being spent on an annual basis from our parent company on the startups that we've invested in. And we're saving thousands of tons of CO2. We're recycling thousands of kilograms of materials and all of those things.

Now, what we've learned in all of those types of things, and this goes back to your point around the puck kind of analogy, which is that how we kind of look at it is there's gotta be a right point at which you introduce a startup to a parent company. What's equally as damaging is, and the example you gave of a CEO saying, what's a startup got to tell me about my industry? I've been doing this for 30 years. What are they gonna know? The other extreme of that example, which is just as damaging by the way, is the person in the corporate who has lots of really exciting conversations with that startup, they go nowhere. And all of a sudden that startup starts going, oh, this might happen. This is a big brand. Maybe I should hold off on one of those sales leads. They're in my pipeline and they get all excited. And of course, without our governance of placing ourselves in the firing line between the two things, it can become quite abusive. And it is dangerous because you've got that big carrot of a big brand that somebody wants to put on their sales pipeline or their next pitch deck and all of those things.

So managing that interaction, making sure that it's safe for both parties, as I kind of said before, is incredibly important. And what we've learned is, through the work we do with venture clienting within JLR as well, we're able to introduce those at the right time. We're able to manage that interaction in a safe environment to make sure that both parties feel as though we're not putting lots of onus on a startup to work with a large corporation. Because you get things like, where's your anti-bribery and corruption policy? Where's your D&I policy? And it's like there's three of us, like leave us alone, we don't have these things.

Fred Schonenberg
Mike, you'll love this. We work a lot with a whole bunch of very large companies. And one of the first things we try to do is create a fast pass with legal, procurement, security. There's these moments and they're like, well, we're just going to send them our onboarding document. I'm like, it's 65 pages long. They don't have a lawyer. Like you'll bankrupt them with this, right? So we have those moments.

I wanted to pick one thing because you sparked it for me was this idea of, I see why the startup doesn't want to have their wheels spun. And of course, everybody wants to be a good actor. If I'm a grouchy CEO, why do I care about the startup experience with my firm? Besides just being a good person, because we've seen this and I have my own answer, but I would love yours is like, I had a very senior person say to me, he goes, why are we doing all this for the startup? Like, what's the value here? And I understand when you invest in them, that's a 10 year marriage plus. But if, for instance, you're just thinking about how your company shows up in the startup ecosystem or from a client team standpoint, why should the big company care?

Mike Smeed
I think that's a wonderful question. I'm not quite sure how I would answer that. I mean, so from our perspective, we have learned that being in the venture capital ecosystem, being a pleasure to work with, doing what you said you would do, when you said you would do it, has become more of a USP for us than maybe we thought could be before. And I think what I would say to your grouchy CEO would be startups talk, right? This is a small world. And we believe that the brand that we are trying to create within InMotion Ventures is one where we're very honest and open with people. 

As I said to you before, it's not natural for a large company to want to work with a startup. And actually, we have found quite successfully ways that we've introduced startups that we've invested in or want to work with to actually a friendly tier one. And we've said, look, it's going to be much easier for us if you could work with them. They could open up to many more customers than you would get with just one sole customer, because that's never healthy for anybody either. And then we get kind of a win-win. 

But what I would say is that reputation precedes you. And if I give you an example, when we look to invest in a startup, they do as much due diligence on us as we would do on them. And we give them every single, obviously with permission, every single founder that is in our portfolio, right? Who do you want to talk to? This is a list. We're not going to give you the two or three that we know are going to be nice about us. We'll give you the whole list. You pick from them. We'll contact you. You guys have a chat. 

And I think what that does is, and again, we'll maybe get onto in a second about the reputation that CVC has is that it lowers the barrier to entry or it lowers the obstacles to taking corporate money or to work with an established large kind of corporation. And I would say that if you've got a bad reputation, it's going to slow you down. And I think that would be the key thing. 

One of the most difficult things to tell somebody who works in a large corporation whose entire life is waking up, going to work, coming back again in one facility is that a startup's got a choice about where they take their money from and who they work with. The best ones. 

Fred Schonenberg
My favorite is always when I had someone say to me that the golden rule. He who has the gold makes all the rules. And I was like, I got to be honest with you. I love it. It's a funny statement, except it doesn't necessarily work in this zone because there's a lot of people with the gold and they can get money from traditional VC. They can get it from your competitors. Like this is different, this is a collaboration.

Why don't we do this? I know we're running tight on time. We always end with this like rapid fire. I'm going to kind of weave a couple of things we wanted to talk about into the rapid fire. And so the first one I'm going to hit you with, so kind of short answers on these is CVC’s negative reputation unfairly earned. Why does it matter?

Mike Smeed
Great question. I think it was earned as a bad reputation. I think we're changing and we need to do more education. We need to help people understand more about both investors, startups and corporations about the importance of CVC. 

Fred Schonenberg
Yeah, and I think it is such a strategic lever for a startup. And I think that the next round investors are starting to realize it's an advantage, not that it is an inhibitor of places that startups can go. Because most of the time it's a signal that somebody serious is interested.

Mike Smeed
I think it's a huge red flag. We've seen a few times corporates, not us, just to be very, very clear. This idea of corporate saying we want to control your product development roadmap. We want to do exclusivity. We were all these kinds of things is a big red flag for us. And we make sure that that never happens. And what I would also say is not every single CVC wants to buy you. I think that would be the other. That's a really strong thing. Like M&A it is nowhere on our priority. It's zero percent. We do not want to acquire the startups that we invest in.

Fred Schonenberg
Very interesting. One sentence to… This can be hard to do in one sentence, but the future of mobility.

Mike Smeed
I would say the future of mobility is five years away. And that's been for about the past 20 years, I think. I think it's an incredibly exciting time and I cannot wait. I know the cars that are coming for the next five, six years. We know what's in them. We're very excited about it. And I can't, we're already in 2035. So let's see what happens.

Fred Schonenberg
I love it. Mike, where should people go to learn more about JLR InMotion Ventures? Where would you like listeners to go from here?

Mike Smeed
So InMotion ventures, we're a wholly owned subsidiary of JLR. You can find us on InMotionVentures.com or LinkedIn. Yeah, please, please contact us. Our thesis is on there. Portfolio companies are there as well. So yeah, please, please reach out.

Fred Schonenberg
Mike, this was awesome. Thank you so much for making the time and sharing all your great insights.

Mike Smeed
Thank you, Fred.