Ford Innovation Boss Meets With VC’s, Startups At U-M Event

YPSILANTI — The door is open for tech startups to talk to Ford Motor Co. about advances in mobility.

That’s the word from Ford Motor Co.’s innovation guru, delivered at the Midwest’s largest venture capital conference, where dozens of young, innovative companies meet with the people who control institutional investment.

“I’m an angel investor in Ford Motor Co.,” said Bill Coughlin, president and CEO of the automaker’s Ford Global Technologies LLC. “I invest in the creation of intellectual property … The door is open to talk to us.”

The leader of the automaker’s skunk works spoke Wednesday at the Michigan Growth Capital Symposium, the annual matchmaking event for startups and venture capital firms, hosted by the University of Michigan and held in Ypsilanti.

Coughlin said the automaker’s skunk works includes a Palo Alto, Calif. laboratory with 125 employees, technology scouts worldwide, contacts with venture capitalists, involvement with incubators like Detroit’s NextEnergy, and participation in innovation challenges and contests.

Ford Global Technologies encourages innovation — and also acts to optimize Ford’s investment in intellectual property and defend Ford’s IP against theft and attack.

Last year, Ford applied for more than 6,000 patents, and received 800 patents — ranking it No. 14 on the list of utility patent applications filed, ahead of companies like Microsoft.

Coughlin is also the man behind the opening of a TechShop location in Detroit — a place where inventors and tinkerers can get access to millions of dollars’ worth of computer aided engineering and design software, and machinery to make things, from 3D printers to a water jet cutter that can slice through eight inches of granite, for a $99 annual membership.

Ford was also among the founders of the Detroit office of the startup mentoring competition Techstars. Founded in California, Techstars provides $118,000 in seed funding and intensive mentorship to new business ideas in exchange for up to 10 percent of the equity in the fledgling companies. Coughlin said 349 startups applied for 10 spots in a mobility business incubator that will be unveiled in downtown Detroit next month.

“Over the next three years, 30 startups will be moving to Michigan to do technology in the area of mobility,” Coughlin said. See for more information. There’s also a video about Techstars Mobility at this YouTube link. 

And Ford is willing to consider ideas that might seem outlandish at first blush. Coughlin quoted venture guru Ben Horowitz: “We’re all looking for a breakthrough idea. And by definition, a breakthrough idea looks like a stupid idea. If everybody recognized the idea as a breakthrough idea, it wouldn’t be a breakthrough at all.”

Added Coughlin: “You get a bunch of smart people in a room and they’ll all tell you why it won’t work.”

Ford has more than 20 mobility experiments going on worldwide, from car sharing to advanced bicycles.

But Coughlin said Ford doesn’t need any help from electric car maker Tesla, which recently opened up all of its patented technologies to other automakers.

“We did take a look at the Tesla patents and just decided we didn’t need any at all,” Coughlin said, drawing a reaction of surprise from hundreds of attendees at Wednesday’s breakfast.

At the event, 32 young companies — 26 of them based in Michigan — made presentations to hundreds of representatives of venture capital firms and other investors. The companies were concentrated in medical devices, medical services, cloud services, and apps. A list of the Michigan-based companies is here. 

In other panel discussions at the event:

* The Midwest has unique strengths as a venture capital hub, according to a panel on “VC Investment Trends and Opportunities in the Midwest.” Said Sach Chitnis, managing partner at Chicago-based Jump Capital: “There is a pragmatism to the investors and entrepreneurs that attracts us. People here want to build real companies.” The panel also identified a gap between startup capital and the next stage, and a worrisome trend of founders leaving companies too soon after the venture money comes in, which they called “early exit disease.” Carl Ledbetter, managing director at Utah-based Pelion Venture Partners, said it requires different skills to take a company from zero to $1 million in revenue, from $1 million to $10 million in revenue, and from $10 million to $100 million — likening it to football, where great kickers make lousy quarterbacks. As for the role of government, Ledbetter said the problem with government getting into the VC business is that it operates on two- and four-year cycles, while investing and the economy do not, and when new officials come in “you get wild swings as people do things they think are going to help and it just makes things worse.” Added Greg Robinson, managing director of Madison, Wis.-based 4490 Ventures: “The one thing government can do to really help is to invest more in education, and the need is more in the STEM curriculum than management or entrepreneurship. A huge push in the sciences is where I would put my money.”

* A panel on the Internet of Things noted that hooking up everything from vehicles to appliances to factory sensors to the internet can be fraught with legal risks. In fact, the Federal Trade Commission has found that a company called TRENDnet Inc. violated FTC law by falsely advertising that its IP cameras could transmit video on the internet securely. In 2012, a hacker found an easy way around the login credentials on TRENDnet cameras, making more than 700 cameras accessible, including cameras used as home security and infant monitors. Nevertheless, the panel said it believes the “IoT” will continue to move forward, from semi-autonomous vehicles to undershirts that monitor your health to automatic detection of stuff like leaks in industrial systems.

* A panel on cybersecurity found much more sophisticated hackers are using much more sophisticated strategies to break into increasingly information-rich systems. They recommended more emphasis on detection and response to intrusions, rather than concentrating spending and effort on defense. Panelists also said cybersecurity is increasingly a top management and board of directors issue, not just an IT department concern. They also said investors should look at the cybersecurity not just of the companies they invest in, but also those companies’ customers and suppliers — for example, a poorly defended supplier that resulted in the Target hack. And they predicted there will eventually be a major hack of a huge cloud provider, because the potential rewards are so great. “Imagine the value of owning every virtual machine at Amazon,” said Ted Shorter, CTO at Certified Security Solutions, an Independence, Ohio-based provider of security services. Agreed Marc Dominus, senior manager and U.S. enterprise risk management solutions leader of the South Bend, Ind. CPA firm Crowe Horwath LLP: “It’s not a question of if it’s going to happen, but when. And there will also eventually be a significant government event of some sort, the magnitude of which could dwarf any corporate events.”

Hosted by the Center for Venture Capital & Private Equity Finance and the Zell Lurie Institute for Entrepreneurial Studies, both part of the University of Michigan Ross School of Business, this year’s symposium was held at the Marriott Eagle Crest Resort.

Since its inception in 1980, the event has helped more than 800 companies secure funding totaling more than $1 billion in capital and has forged relationships that continue to foster growth in the region’s startup community. More than 400 entrepreneurs, researchers, investment professionals and business executives attended, and nearly 100 regional and top national venture capital firms were represented.

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