Another transportation company is getting into the startup space, as Volvo Financial Services (VFS) announces its new ‘iLabX‘ accelerator program and innovation lab, based at headquarters in Greensboro, North Carolina. The 10-week program will accept six startup teams and kick off in February.
iLabX is being administered by L Marks, a London-based corporate innovation consultancy that also runs an innovation lab program for BMW in both the UK and U.S.
“By working collaboratively with other entrepreneurial minded companies, we aim to drive new thinking, explore new technologies and develop breakthrough solutions,” said VFS President Scott Rafkin in a statement. “Our ambition is to ensure VFS continues to remain highly relevant for our customers well into the future.”
VFS is the financial arm of Volvo Group, focusing all of Volvo’s operations in dealer and customer financing, insurance and related services. As such, iLabX is particularly interested in startups developing fintech products.
However, Ben Thomas of L Marks says that they don’t want to discount startups in other industry verticals from applying. Instead of narrowing the focus by industry, they’ve come up with four broad “themes” to guide applications: building an exceptional customer journey, financing next generation transport solutions, digital transformation for business excellence, and a wildcard category.
“The categories are deliberately broad — because although VFS has areas of focus for their business, they also don’t want to disqualify any great startup companies from applying because they don’t fit a precise vertical. We go through and read every application and work out what the business fit/use case would be for each company and evaluate them from that,” Thomas tells Hypepotamus in an email interview.
Thomas says they might consider products ranging from “zanier” fintech like cryptocurrency, to AI or big data analytics. They will also look at the stage of a startup on a case-by-case basis, even considering concept-stage companies — though Thomas says their “sweet spot” is between seed and Series A.
Once applications close on December 2, the team will select up to 15 finalists in each category for a live pitch. Out of these, up to six total startups will be selected to join iLabX. Founders do not need to be based in Greensboro for the program, but will need to have the flexibility to travel there.
During the 10 weeks, startups will get access to a host of mentors from the top echelons of VFS and L Marks. They will receive advice on go-to-market, commercialization and working with corporates like VFS, and industry professionals in the fintech and transportation space.
They’ll also be evaluated for potential investment from VFS and L Marks. Though the program itself doesn’t require an equity share, once the 10 weeks are over the iLabX team will determine which, if any, of the startups will be offered traditional venture investment.
Thomas says L Marks and its corporate partners has invested in over 20 companies that have participated in its global labs. Moreover, the success rate for startups commercializing their products with the corporate partner is around 75 percent.
Volvo is certainly not the only transportation company to look externally to drive innovation. While staffed by an internal team, the newly-launched Mercedes-Benz Lab1886 incubator in Atlanta allows unrelated Daimler employees to develop and commercialize innovative products using its resources.
Meanwhile, in its first year the aforementioned BMW Innovation Lab generated over 160 applications from 30 countries, and four startups entered a commercial relationship with BMW following the program.
“As a market leader in commercial transportation and the finance of that transportation, VFS recognized, as many corporates do, that several markets are seeing massive disruption from smaller, more agile companies. Lots of large corporates ignore these smaller players and end up being cannibalized by them,” Thomas tells Hypepotamus.
“Instead, VFS saw the potential in harnessing these ideas and these small companies, and partnering with them to deliver new solutions is a much more effective method of adopting new technology!”
Images via Volvo Financial Services