The Center for Automotive Research, a nonprofit based in Ann Arbor, reports that its board of directors has tapped its president and CEO, Jay Baron, to replace David Cole as its chairman. Cole, a founding member of the research nonprofit and an Xconomist, has become the group’s chairman emeritus. The nonprofit, known as CAR, says it provides research to the auto industry as well as state and federal governments.

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BlueKai, a Bellevue, WA-based Internet data exchange company that connects companies with information on the behavior of their customers, has wrapped up a $21 million Series C funding round, the company announced today.

New investor GGV Capital (formerly Granite Global Ventures) led the round, which also included previous BlueKai investors Battery Ventures and Redpoint Ventures. BlueKai has continued to pick up customers and revenue since its Series B round in December 2008. The newest equity investment will go toward the company’s effort to transform how companies use customer data to tailor their ad campaigns, says CEO Omar Tawakol.

BlueKai enables websites to sell data on consumer demographics or buying behavior to companies that wish to use the information to target their advertising more directly and efficiently. The example Tawakol gives is that airlines looking to market to travelers for a specific destination can use BlueKai to buy data from travel websites on the user traffic surrounding that destination. BlueKai’s data providers include retail, auto, travel, and finance companies, while the data buyers account for 70 percent of the top 30 Internet ad networks and portals, according to its website.

Companies that buy data from BlueKai currently have to buy into a specific data campaign to access the customer information, and build their advertising strategy around it. To expand, BlueKai is looking to automate companies’ connection to data on the BlueKai marketplace, making the creation of banner ads on websites as immediate and targeted to the relevant consumer as the ads that appear on search engine results pages are.

“It’s almost that the banner ecosystem wants to become automated to the same degree that the search engine marketplace is automated,” Tawakol says. “And we’re going to make sure that the data component of that becomes automated.”

BlueKai has now raised about $35 million in venture capital dating back to March 2008. Battery Ventures led a $10.5 million Series B round for BlueKai in December 2008, which also included cash from Redpoint, while Redpoint led a $3.2 million Series A round that closed in March of that year.

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Tomorrow, Detroit’s automakers are expected to give Congress a detailed plan that explains exactly how they intend to use $25 billion in taxpayer funding to engineer a turnaround—no doubt refueling the nationwide debate over the auto industry bailout.

Meanwhile, venture capital funding for innovative automotive technologies has accelerated dramatically over the past five years. Investment data reviewed by Xconomy shows venture deals in automotive startups have increased by more than 2,979 percent—from a near-standing start of $8.1 million put into five deals in 2003 to more than $250 million and two dozen deals in just the first nine months of 2008 (see charts at the end of this article).

Bill Klehm, CEO of Fallbrook Technologies, a San Diego startup which itself has raised some $25 million to help it develop a gearless transmission, says he laughs when he hears Detroit auto executives fret about competing against China’s low-cost manufacturing. “Nobody should be worried that the Chinese are coming,” Klehm says. “But the U.S. automakers should be concerned that the U.S. entrepreneurs are coming.”

While total VC funding for automotive startups is relatively small—venture firms put more than $1.35 billion into U.S. biotech companies in just three months that ended in September—the explosive growth in automotive deals reflects a phase change among VC firms nationwide. (The total also is clearly an underestimate, since it does not include startups such as battery developer A123 Systems of Watertown, MA, which counts major carmakers in the United States and Europe as its largest target market.)

“They are realizing that there is a big gap between consumer demand and the supply of the kinds of vehicles that the country is going to need,” says Bilal Zuberi, who specializes in energy and cleantech deals at General Catalyst Partners, a $1.7 billion venture firm in Cambridge, MA. “It’s a difficult industry, but there are opportunities. It is a $100 billion industry in which innovations are really needed, really fast.”

Any automotive technologies that can help the big three U.S. automakers meet tougher fuel economy standards and other “pain points” could be helpful, says Boston lawyer Tom Burton, who heads the energy and cleantech practice of the Mintz Levin law firm.

“In the last year and a half, we’ve really seen an uptick in the VC flow into these companies,” says Burton, who has been involved in the financing of several deals. “The downturn in the economy and the fact that Detroit is battered is what creates an opportunity for many of these guys.”

Fallbrook Technologies CEO Klehm contends the opportunity is big enough to drive a truck through.

Companies and small businesses that operate delivery fleets are searching for ways they can retrofit their trucks and vans to reduce fuel costs, which were acutely painful when gasoline was more than $4 a gallon, Klehm says. At Wal-Mart, for example, Klehm says a 1 percent improvement in fuel economy is worth $52 million. “Ford is talking about improving the fuel economy of next year’s lineup,” he says. “Fleet operators need solutions today. They don’t need promises for the next year.”

As a result, the surge in VC funding is spreading well beyond high-profile startups like Silicon Valley’s Tesla Motors, which has developed a high-performance, all-electric sports car … Next Page »

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