The global transport services market was roughly $6.63 trillion by the end of 2018, according to consultancy Business Research Company (BRC) and was estimated to have grown at a compound annual growth rate of 7.1% since 2014.
BRC’s Transport Services Global Market report notes that the main driver behind this growth was the confluence of favourable factors such as the rise of e-commerce platforms, economic growth in emerging markets and oil prices. It also cites weak wage growth in developed countries as well as changing consumer preference towards the ownership of private vehicles as negative factors.
Despite its size and significance for the global economy and tailwinds in recent years, there may be some hurdles ahead. According to Global Transportation and Logistics Industry Outlook 2019, by ResearchMarkets.com, there are significant macroeconomic fundamentals that could contribute to a slowdown in transport services – trade wars, interest rates hikes, slow growth of the global economy and market pressures for emerging economies.
However, much of the interest from the corporate-backed innovation scene in the transport and mobility space has been concentrated in autotech, including autonomous, connected and electric vehicles, as well as ride-hailing services. But corporate venturers’ interest in connected car technologies seems to have subsided recently, according to our data. The hype around ride hailing has also dissipated somewhat after the much-anticipated IPOs of key players like Uber and Lyft took place last year. Autonomous driving and electric vehicles, however, are still an attractive target for corporates due to their potentially profound disruptive impact.
Autonomous mobility technology is in the process of evolving from driver assistance to full-blown driverless vehicles, which are likely to become a reality. The McKinsey Center for Future Mobility expects expect ‘level-four’ autonomy, where vehicles operating within virtual geographic boundaries, to materialise between 2020 and 2022, with subsequent full-scale adoption. Full autonomy with level five technology (driverless vehicles operating anytime and anywhere) is forecast to become reality by 2030 at the earliest. The McKinsey Center emphasises the positive externalities of autonomous mobility’s disruptive potential: “With this comes significant benefits, including increased personal safety, time saving for drivers, mobility for nondrivers, decreased environmental harm and reduced transportation costs. It will also lead to drastic shifts in value chains, profit pools, and needed capabilities (for example, software expertise or cybersecurity) that could introduce entirely new industries within automotive.”
While such predictions are exciting to indulge in, as with any process of large-scale technological disruption, there are bound to be negative by-products. For example, many jobs may become obsolete or safer roads could lead to reductions in government revenues from road policing and fines. While beneficial in the long run, any Schumpeterian creative destruction scenario is almost bound to lead to short and medium-term socio-economic tensions, if it transpires.
Advances in fields such as artificial intelligence (AI), sensors and battery technologies are enabling autonomous driving technology and making the market prospects for it alluring. The Brookings Institute estimated the size of the autonomous technology ecosystem as at least $80bn by the end of 2018. According to forecasts cited by MarketWatch, the global self-driving car market is predicted to grow at a CAGR of 36.2%, which would drive global revenues to more than $173bn by 2023.
Electric mobility also promises growth and deep disruption. According to the Global EV Outlook 2019 report from the International Energy Agency, the global electric car fleet exceeded 5.1 million vehicles in 2018, up two million from the previous year. Sales of new electric cars effectively doubled. The report identifies China as the largest market, followed by Europe and the US. The reports also sheds light on the factors that make this technology potentially viable: “Key enablers are developments in battery chemistry and expansion of production capacity in manufacturing plants. Other solutions include the redesign of vehicle manufacturing platforms using simpler and innovative design architecture, and the application of big data to right size batteries.”
The road ahead
If electric and autonomous mobility are so promising, what are the potential stumbling blocks? Much of the answer lies in consumer perception. According to data from the 2019 Deloitte global automotive consumer study, consumer interest in self-driving vehicles lags the pace of investment in advanced vehicles.
In the world’s biggest automotive market, the US, 50% of the respondents felt such vehicles would not be safe – slightly up from the previous year’s 47%. This means consumers still need to be convinced. In other major markets like China, Japan, South Korea, India and Germany confidence in autonomous mobility has also plateaued. In addition, more than half of consumers in those major markets feel that media reports of accidents involving autonomous vehicles have made them more cautious – South Korea (68%), the US (65%), India (64%), China (64%), Germany (56%) and Japan (50%).
The Deloitte study also points to some potential short-term detractors of consumer acceptance of electric mobility: “While 29% of US survey respondents would prefer a hybrid, battery, or another alternative to traditional drive-trains for their next vehicle – up from 20% last year – low fuel prices, relaxed emissions standards, and fewer rebates could dampen US electric vehicle adoption.”
Another problem is the monetisation of autonomous and electric mobility tech, as consumers’ attitudes and intentions often differ from their actual buying behaviour. Deloitte’s survey from the previous year (2018) had found a sizeable proportion of consumers in major markets (Germany 50%, US 38%, Japan 31%) were unwilling to pay a premium charge for vehicles equipped with autonomous or semi-autonomous capabilities. Similarly, only 42% of consumers in Germany were willing to accept higher costs of vehicles with alternative powertrain technology.
The latest version of the Deloitte study found that consumers were not entirely sold on the idea of paying a premium for connected vehicles. A third (33%) of US consumers remains unwilling to pay more for a connected vehicle, and a slightly larger portion (42%) would only pay up to $500 extra for this functionality. In Germany, 40% of consumers claim to be willing to pay €600 more for such a vehicle. Only a higher share of Japanese consumers (72%) are willing to pay extra but their upper limit stood only at ¥50,000 (roughly $450).
Without price premiums, the R&D costs of these technologies cannot be effectively recouped and this may threaten their economic viability. This is, after all, the reason incumbent manufacturers turned to corporate venturing and startups, aiming to source external innovation while spreading the risks.
Another challenge for the incumbents is the declining number of consumers who would most trust traditional automakers to bring fully autonomous technology to the market, according to the Deloitte study. In 2019, only 39% of US consumers said they would trust conventional manufacturers to complete the task, versus 47% in 2018 and 2017.
However, it is not clear whether this shift in consumer sentiment is permanent, so it is uncertain if cars of the future will be produced by the brands consumers are already familiar with or by emerging ones.
The industry’s core business appears to be in a challenging phase. According to Fitch Ratings, global passenger car sales declined to 80.6 million new units sold in 2018, down from 81.8 million in 2017. This was the first annual drop since the end of the recession in 2009. Fitch also said it expected the figures for 2019 to drop to 77.5 million units.
A major disruption in mobility has been ride hailing, which has seen significant amounts of capital invested in major markets and two of the major players in the US going public. While the positive externalities of this business model are reduced urban traffic congestion and CO2 emissions, it has also disrupted established providers such as taxis, which has brought regulatory and legal challenges. There are also concerns about the profitability and economic viability of the business model, given the intense level of competition.
According to data from Statista, total global revenue in ride-hailing was $183bn in 2019 and was forecast to grow at CAGR of of 14.8% by 2023. This would give a market volume of $319bn, with user penetration of 13.5% in 2019 but 20.0% by 2023. By far the biggest market for this sub-sector is China, accounting for more than $53bn of the global revenues in 2019.
Deals
For the period between November 2018 and November 2019, we reported 152 venturing rounds involving corporate investors from the transport and mobility sector. Many of them (62) took place in the US, while 16 were in Japan and 15 in China.
Many of those commitments (62) went to emerging enterprises from the same sector (mostly autonomous and connected car tech, vehicle hardware and ride hailing and car sharing). The other key sub-sectors were: industrial, with 24 deals, mostly robotics and drones or additive manufacturing; services (22, mostly logistic and supply chain services plus accommodation and travel), and IT where AI, big data and analytics as well as semiconductors and chips accounted for 20 transactions.
Transport corporates’ co-investments show the broad spectrum of their interests. The commitments ranged from autonomous truck tech developers (Tusimple) and autonomous vehicle developers (GM Cruise) to driver assistance apps (Urgent.ly), autonomous micro-shuttle bus services (May Mobility), charging stations for electric vehicles (Chargepoint) to cybersecurity (GuardKnox, Upstream Security) and accommodation and travel services (Miles, Oyo Rooms).
On a calendar year-on-year basis, capital raised in corporate-backed rounds declined from $12.08bn in 2017 to $7.69bn in 2018, a 36% decrease. The deal count, however, increased by 8% to 161, up from the 149 rounds in 2017.
The 10 largest investments by corporate venturers from the transport sector were also concentrated mostly in the transport and mobility space.
The leading corporate investors from the automotive sector in terms of largest number of deals were Toyota, BMW and Yamaha. The list of transport corporates committing capital in the largest rounds was headed by carmaker General Motors (GM), Honda and Volkswagen.
The most active corporate venture investors in emerging transport businesses were SoftBank, Toyota and BMW.
The emerging transport businesses corporate venturers’ portfolios came from ride hailing (Zum, Go-Jek), autonomous transportation services (Shuttle, Voyage, May Mobility), autonomous vehicles and related technologies (GM Cruise, Sense Photonics) through connected car technology (Zendrive), and a truck booking platform (Best Mile), to autonomous leasing and financing platform (Fair.com) and EV developers (Rimac Automobili).
Overall, corporate investments in emerging transport-focused enterprises went down slightly from 206 rounds in 2017 to 192 by the end of 2018, suggesting a 7% decrease. The estimated total dollars in those rounds also declined, by 15%, from $30.79bn in 2017 to $26.23bn in 2018. By November 2019 we had tracked 177 rounds, worth an estimated total of $16.63bn, suggesting that valuations may be cooling down.
Corporates from the transport sector invested in large multi-million-dollar rounds for the same sector but also reflected their wider investment theses by backing other sectors like services, energy and IT. Three of the top 10 deals were above the $1bn mark.
US-based autonomous driving software developer Cruise Automation secured $1.15bn in funding from investors including GM, the manufacturer that spun it out in 2018, Honda and SoftBank’s Vision Fund. Investment manager T Rowe Price Associates also participated in the round, which valued the company at $19bn post-money. It is working on software that will enable driverless cars to process data from their sensors and adapt accordingly, particularly in electric vehicles such as GM’s Chevrolet Bolt hatchback. The carmaker acquired Cruise for $1bn in 2016, three years after it was founded.
Ride hailing company Uber spun off its autonomous driving division, Uber Advanced Technologies Group (ATG). The spin-off received $1bn of backing from three corporate venturers: automotive components manufacturer Denso and Toyota agreed to invest $667m jointly while Vision Fund provided the remaining $333m. The transaction reportedly valued Uber ATG at $7.25bn post-money. The division is developing autonomous vehicle technologies including sensors and systems geared with object perception, motion and prediction planning, mapping and data visualisation technology.
Autonomous driving software developer Argo AI received $2.6bn in capital and assets from Volkswagen, in a deal reportedly valuing the company at more than $7bn. VW invested $1bn directly and agreed to purchase secondary shares from Ford for $500m over the next three years. The US-based company has taken ownership of VW’s autonomous vehicle unit, Autonomous Intelligent Driving (AID), which is valued at $1.6bn. Ford invested the remaining $600m of its existing $1bn commitment. Both carmarkers use Argo AI’s technology in the manufacturing of their self-driving vehicles. Founded in 2016, Argo AI is developing virtual driver systems and high-definition maps that are used to power and navigate self-driving vehicles. It will use AID to expand its team and establish European headquarters in Munich.
China-based ride hailing services provider Didi Chuxing raised $600m from Toyota as part of an agreement to form a joint venture (JV). The deal reportedly valued Didi Chxuing at about $62bn. The JV will also involve automotive manufacturer GAC Toyota Motor –a partnership between Toyota and logistics service provider GAC – and will offer services aimed at drivers for ride hailing platforms, such as car leasing options. Didi Chuxing operates a series of transportation services, including ride hailing, buses, car rental, food delivery and e-bikes. It also has a financial services platform. Having initially focused on the Chinese market, it has expanded internationally into markets including Mexico.
Ford Motor Company agreed to invest $500m in US-based plug-in electric off-road vehicle developer Rivian. Ford invested as part of a partnership agreement that will allow it to develop a truck that makes use of Rivian’s flexible skateboard platform, adding to a planned range that will include electric versions of its Mustang sports car and F150 pickup truck. Founded in 2009, Rivian has created a seven-seater sports utility vehicle and a five-seater truck. It has earmarked late 2020 as a release date for both vehicles and is accepting pre-orders.
Engineering services company China Railway Group and insurance firm China Life were two of the four co-leaders in a 2.4bn yuan ($356m) series A round for China-based supply chain services provider Jusda. The others were investment manager CICC, through its CICC Capital unit, and venture capital group IDG Capital, while Titanium Capital and Yuanhe Origin Investment also participated. Formed as an affiliate of manufacturing services firm Foxconn and rebranded in 2015, Jusda has built a platform that uses AI and big data to manage diversified supply chains on behalf of customers. The product brings together the sourcing of supplies, materials and equipment with the delivery of finished products.
Electric vehicle charging network operator ChargePoint received $240m in a series H round backed by electric utility American Electric Power and industrial product manufacturer Siemens. Chevron Technology Ventures and BMW i Ventures, the corporate venturing units of oil and gas company Chevron and BMW and Daimler Trucks & Buses, a subsidiary of the automotive producer, also participated in the round. The series H was led by private equity firm Quantum Energy Part and also featured VC firms Braemar Energy Ventures, Clearvision, Linse Capital, Singapore’s sovereign wealth fund GIC and state-owned pension fund Canada Pension Plan Investment Board. Founded in 2007 as Coulomb Technologies, the US-based company operates a network of more than 57,000 chargers, and serves corporate and public customers, such as cities. The company’s chargers have been used more than 45 million times to date – the equivalent of 47 million gallons of petrol.
UK-based machine intelligence technology developer, Graphcore, which is linked to the University of Bristol, raised a $200m series D round featuring the patient capital fund Ahren Innovation Capital and a host of corporate investors. The round closed at a $1.7bn post-money valuation, though Ahren’s contribution was not disclosed at the time. The round was co-led by holding company Sofina and investment firm Atomico and backed by BMW i Ventures, Robert Bosch Venture Capital and Dell Technologies Capital, the investment subsidiaries for BMW, industrial product manufacturer Bosch and computer vendor Dell. Consumer electronics manufacturer Samsung also participated. Graphcore has created a processor dubbed the intelligence processing unit, which has been tailored to AI applications. Ahren expects the company to benefit from its expertise in machine learning and deep technologies.
Transport technology developer Virgin Hyperloop One raised $172m in funding from investors led by port terminal operator DP World. The operator provided at least $90m and was one of 80 investors, though none of the other participants were disclosed. The US-based company, which was founded in 2014 as Hyperloop Technologies, is seeking an additional $52.5m to close the round at approximately $225m. It is developing a vacuum tube transport system that was first proposed in a white paper by entrepreneur Elon Musk, who made the designs publicly available.
Daimler led a $170m series E round for US-based advanced battery materials developer Sila Nanotechnologies that included industrial technology and appliance producer Siemens’ Next47 unit. Alex Nediger, director of cooperation and innovation management for Daimler, will join Sila Nano’s board of directors, and Jeff Immelt, the former chief executive of industrial conglomerate General Electric, will be an independent director. Sila Nano is developing materials for use in lithium-ion batteries that are intended to be lighter and safer than existing graphite batteries, while providing higher energy density. This funding will support an increase in manufacturing volume as the company prepares to commercialise its technology, starting with partnerships with Daimler and BMW.
Chehaoduo secured a $1.5bn investment from SoftBank Vision Fund. The China-based automotive e-commerce platform, a spinout of classified marketplace Ganji, operates a used vehicle auction and trading platform, Guazi, and an after-sales services subsidiary, Maodou. The funding will go towards technology, product and services development. Chehaoduo also plans to increase its marketing activities and bolster its offline presence.
The Vision Fund also provided more than $940m in financing for Nuro, a US-based developer of an autonomous delivery vehicle. Founded in 2016, it is working on a small four-wheeled driverless electric vehicle designed to be able to collect and transport consumer goods such as dinners, groceries or dry cleaning. The vehicle has already been trialled Scottsdale, Arizona, and Nuro has also signed a delivery partnership agreement with grocery chain Kroger and licensed its technology to autonomous truck developer Ike.
Bird, a US-based e-scooter rental service backed by real estate developer Simon Property Group, raised an additional $300m to expand its series C round to $600m. The extension was led by financial services and investment group Fidelity at a valuation of $2bn. Founded in 2017, Bird runs a service that enables users to book an electric scooter through an app that can be left at their destination without returning the bike to a station.
Ant Financial, e-commerce group Alibaba’s financial services affiliate, co-led a funding round sized at almost 4bn yuan ($582m) for Hello TransTech, the China-based operator of bicycle rental service Hellobike. The round was co-led by investment firm Primavera Capital Group and included undisclosed existing investors. Hellobike is an app-based bicycle sharing platform used across more than 300 Chinese cities. It focuses on second and third-tier cities and is considering an expansion into adjacent sectors such as car sharing or ride hailing.
Exits
Corporate venturers from the transport sector completed 10 exits between November 2018 and November 2019 – six acquisitions and four initial public offerings (IPOs). The total estimated exited capital in those transactions was $14.01bn.
US-based on-demand ride service Uber, which counts with a range of corporate investors, including Daimler, as backers, raised $8.1bn when it went public on the New York Stock Exchange. This was a much-awaited IPO of what was for a long time the most highly valued unicorn. Uber issued 180 million shares, priced at $45.00 each, near the bottom of the $44 to $50 range it had set. Even though this was the largest IPO since Alibaba floated in, 2014, raising $25bn, it was considered by many a disappointment. It valued Uber at $82.4bn on the first day of trading but the share price subsequently went down to $41, leaving it with a total market capitalisation of around $69bn. Its previous corporate backers included Fidelity Investments. Founded in 2009, Uber runs an app-based ride service spanning 63 countries plus food delivery and last-mile delivery services. Its core ride hailing service boasts 91 million monthly active users and its UberEats subsidiary 15 million.
Uber agreed to acquire United Arab Emirates-based ride hailing service Careem for $3.1bn, providing exits for corporates including e-commerce firm Rakuten, telecoms firm Saudi Telecom, travel agency Al Tayyar, ride hailing service provider Didi Chuxing and Daimler. The transaction reportedly consisted of $1.4bn in cash and $1.7bn in convertible notes, which can be turned into Uber stock at a price of $55 per share. Careem operates a ride hailing platform that covers more than 100 cities in the Middle East, Africa, Turkey and Pakistan in addition to a digital payment business, Careem Pay, and a last-mile delivery service called Careem Now.
US-based on-demand ride provider Lyft, which counts several corporates among its investors – including carmaker Jaguar Land Rover and parts manufacturer Magna – raised $2.34bn in an IPO in which it floated at the top of its range. Lyft issued 32.5 million shares priced at $72 each. It initially had planned to issue almost 30.8 million shares priced between $62 and $68 each, before upgrading the range from to $70 to $72 earlier. The company was valued at $24.3bn in the offering. Founded in 2012, Lyft runs a ride hailing platform that facilitated rides for some 30.7 million users in 2018 through a network of about 1.9 million drivers. It made a $911m net loss in 2018 from approximately $2.16bn in revenue. The offering came after some $4.4bn in equity financing for Lyft.
Livongo Health, a US-based health management technology developer backed by corporates including auto parts provider Wanxiang America Corporation, pharmaceutical firm Merck & Co and care provider Humana, went public in an IPO sized at more than $355m on the Nasdaq Global Select Market. The IPO consisted of approximately 12.7 million shares priced at $28 each, significantly above the $20 to $23 range it had set, with the number of shares also increased from 10.7 million. Livongo’s shares peaked at $45.46 before closing at $38.10, giving it a market cap of $3.39bn. Founded in 2014, Livongo helps patients living with a chronic condition to manage their health through a data platform that relies on smart devices and offers users personalised digital guidance and round-the-clock access to health professionals. The company is targeting users dealing with diabetes, hypertension, weight management and behavioural health issues. It had raised $222m in funding ahead of its IPO.
Life360, the US-based family-tracking technology provider backed by corporates ADT, BMW and Duchossois Group, raised more than A$145m ($105m) in its IPO. Life360 issued 23.5 million chess depositary interests (CDIs) – with three CDIs representing one share – on the Australian Securities Exchange, priced at $3.46 each to raise $81.5m. Existing shareholders sold another 6.8 million CDIs to bring the proceeds from the offering to $105m. Founded in 2008, Life360 has developed web and mobile apps that enable family members to locate each other and be notified when others arrive at a predefined location such as home, school or work. Users can communicate privately with each other and in group chats. The company also offers a feature that detects when a user is involved in a car crash and alerts emergency services. The IPO proceeds will drive international expansion efforts and support its plans to develop home and car insurance products as well as home security devices.
Car sharing service provider Getaround acquired Nabobil, a Norway-based peer-to-peer car renting service backed by vehicle dealership Bavaria Nordic, in deal worth $12m. Founded in 2015, Nabobil allows more than 180,000 users rent a car for short trips around cities in Norway. The company offers a fleet of more than 7,000 cars, 20% of which are electric. Nabobil will integrate Getaround’s technology as part of the deal, such as its Connect Device, which enables users to unlock cars with their smartphones.
Digital mapping developer Dynamic Map Platform agreed to purchase Ushr, a US-based mapping technology startup backed by GM, for an undisclosed amount. Emerald Technology Ventures also took part in the round, as did fellow venture capital firm Enertech Capital, Ushr’s largest shareholder before the acquisition. Spun out of 3D geospatial firm GeoSpatial in 2007, Ushr provides high-definition mapping software to help self-driving vehicles navigate. The platform has mapped all controlled access highways in the US and Canada.
Autonomous driving technology developer Aurora agreed to buy Blackmore Sensors and Analytics, a US-based light detection technology maker backed by BMW and Toyota, for an undisclosed amount. The carmakers had invested through their venturing arms, Toyota AI Ventures and BMW i Ventures. Founded in 2016, Blackmore is developing light detection and ranging technology-based sensors that use light to pinpoint objects and measure distance rather than the traditional method of radio signals. The sensors use frequency-modulated continuous waves of light to detect objects at a greater range whilst using less power.
Drive.ai, a US-based autonomous driving software developer backed by ride hailing service Grab, was acquired by consumer electronics producer Apple for an undisclosed sum as Drive.ai prepared to shut its headquarters. Apple’s interest in Drive.ai was first reported as an acqui-hire deal that involvee the corporate taking on a select number of Drive.ai’s autonomous driving engineers. Apple will own Drive.ai’s autonomous vehicles and other assets and plans to directly recruit members of its team, who mostly specialise in engineering and product design. Drive.ai had been piloting a ride hailing service with driverless, bright orange vehicles which navigate roads using its deep-learning-driven software. It has conducted fixed-route testing of its vehicles on public roads without human driver supervision.
Global Corporate Venturing also reported several exits of emerging transport-related enterprises that involved corporate investors from other sectors.
Online classified listings operator 58.com sold part of its stake in China-based automotive marketplace operator Chehaoduo to an unnamed third-party investor for more than $713m. The corporate did not identify the buyer, but released the news on the same day as Chehaoduo secured $1.5bn in funding from SoftBank’s Vision Fund. 58.com will continue to own a minority shareholding. The listings operator owned a 46% stake in Chehaoduo ahead of its spinoff, following the corporate’s acquisition of Ganji earlier in 2015. It did not reveal the size of its stake after the sale.
Car sharing service provider Getaround acquired France-based car rental marketplace Drivy in a $300m transaction that allowed car repair services provider Mobivia to exit. Founded in 2010, Drivy runs a peer-to-peer car rental platform with roughly 2.5 million users across France, Germany, Spain, Austria, Belgium and the UK which enables users to book a vehicle on the platform and unlock it with an app on their smartphone. The merged company will have more than 5 million users across 140 US cities and 170 cities in Europe.
Tuanche, a China-based automotive e-commerce marketplace backed by media group Bertelsmann, floated, pricing its shares at $7.80, settling on the lower end of its range and securing $20.3m in its IPO. The company issued 2.6 million American depositary shares. It had originally set a range of $7.50 to $9.50, targeting as much as $150m in proceeds. Founded in 2010, Tuanche operates an e-commerce marketplace for cars and sells vehicles through its public auto shows. The company also built a virtual dealership to connect manufacturers with second-hand dealerships. Tuanche claims to be the third largest e-commerce marketplace by volume in its home market but suffered a $3.2m net loss in the first half of 2018, from $40.7m in revenue.
Aviation group Vista Global agreed to acquire JetSmarter, the US-based private flight subscription service backed by private aviation company JetEdge, in an all-share deal of undisclosed size. Founded in 2012, JetSmarter operates a mobile app that enables users to browse and book seats on private aircraft. Customers create a custom charter flight using the platform or can book all the seats to make it a fully private journey. The company’s booking technology will be integrated into the back-end technology of Vista Global’s VistaJet, Vista Lease and XOjet brands post-acquisition.
Funds
For the period between November 2018 and November 2019, corporate venturers and funds investing in the transport and mobility sector secured over $4.03bn in capital via 21 funding initiatives, which included 11 VC funds, eight launched CVC subsidiaries, one accelerator and one other initiative.
On a calendar year-to-year basis, the number of funding initiatives in the transport sector stood at 24 in 2018, down from the peak at 31 registered in 2017. The total estimated capital also decreased substantially from $5.53bn to $4.41bn and this downward trend appeared to have continued also through 2019. By mid-November 2019, we had reported 15 such initiatives with a total of $3.64bn of capital.
Carmakers Chongqing Changan Automobile, Dongfeng Motor and FAW joined Alibaba, internet group Tencent and retail conglomerate Suning to form a 9.76bn yuan ($1.46bn) investment entity. The joint venture will invest in the on-demand ride service sector, with a particular focus on vehicles running on renewable energy. It also intends to establish its own China-based ride hailing business. The corporates, all of which are headquartered in the country, were joined by a range of unspecified funds. Alibaba, Suning and Tencent provided their share of the capital through unnamed investment vehicles. Suning is the largest shareholder, with a 19% stake, while Chongqing Changan Automobile, Dongfeng Motor and FAW own 15% each. Alibaba, Tencent and the undisclosed funds hold the remainder of the shares.
Germany-based insurance and asset management group Allianz increased the capital available to Allianz X, the digital investment vehicle it formed in 2013, from €430m to €1bn ($1.13bn). Allianz X targets growth-stage companies developing digital technologies relevant to its parent’s business, covering areas such as mobility, wealth management, cybersecurity, data analytics, connected property and health products. The firm said the move was a reflection of the unit’s success in its investments and partnerships as well as its importance to Allianz’s digital transformation plan. Iván de la Sota, Allianz’s chief business transformation officer, said: “We are very pleased with the progress Allianz X has made thus far and are committed to further invest and develop the next generation of digital growth companies related to Allianz’s core business.”
Alibaba’s Electronic World Trade Platform and online listings platform 58.com have co-anchored a $200m first close for a fund launched by China-based venture capital firm ATM Capital. The corporates were joined by private investors including Wang Xiaochuan, chief executive of search engine provider Sogou. The firm did not disclose its final target for the fund or when it expects to reach a final close. ATM Capital will focus on early and growth-stage investments in logistics, retail, media and financial technology developers operating in Southeast Asia. Its founding partners are Tony Qu, an associate director at Alibaba Capital Partners for five years until 2012 who went on to CDH Investments before founding Bat Capital, and Jeeves Jiang, former chief executive of smartphone producer Coolpad Indonesia. Electronic World Trade Platform, which was formed by Alibaba and backed by external partners, contributed through EWTP Technology and Innovation Fund, a $600m investment vehicle backed by Alibaba and its financial services affiliate Ant Financial.
US-based venture capital firm Valo Ventures reached a $175m final close for its debut fund, securing capital from limited partners (LPs) including electricity producer Fortum. The Finland-based corporate agreed to commit $170m to the firm, which was founded by Scott Tierney, a co-founder of CapitalG, the corporate VC subsidiary formerly known as Google Capital. Founded in 2018, Valo Ventures is focused on investing in early and growth-stage technology startups that could bring about long-term social, economic and environmental benefits. The firm will target North America and Europe-situated companies tackling global trends, such as empowered consumers, autonomy and mobility, urbanisation, climate change and the circular economy.
US and UK-based venture capital firm AV8 Ventures has closed its €150m ($170m) debut fund after securing the full amount from Allianz. AV8 will invest in seed and series A-stage startups in the digital health, big data, AI, mobility and enterprise technology sectors. The fund already boasts several portfolio companies including Locomation, an autonomous trucking technology spinout from Carnegie Mellon University. The portfolio also includes women’s healthcare platform Alpha Medical and Contract Wrangler, which uses machine learning to extract information from vast quantities of contracts, as well as weather forecasting service PlanetIQ. Boiler installation service Hometree has also received funding from AV8, as has property transaction services provider M-Qube and workforce management platform developer Swift Shift.
Brazil-based venture capital firm Monashees closed its eighth fund, raising a total of $150m from LPs including online lending platform CreditEase. Fund VIII’s LPs included Singaporean state-owned investment firm Temasek, Brandywine Trust Group, S-Cubed Capital, IDG Capital, Horsley Bridge Partners, University of Minnesota, private investor Mike Krieger and 15 high-net-worth Brazilian groups and families. Founded in 2005, the firm invests in early-stage companies based in Latin America, targeting sectors such as healthcare, financial services, transport and logistics. The close brings the total money raised by the firm to $430m.
SAIC Capital, the corporate investment vehicle for China-based carmaker SAIC Motor, raised 1bn yuan ($145m) for a private equity fund following LP commitments from investors including automotive components producer Shinry Technologies. The firm said in a statement it will target companies developing AI and 5G technologies, as well as trends in the electric vehicles and intelligent vehicles sectors. The fund is overseen by SAIC Capital’s private equity arm, Shang Qi Capital. Its investors include SAIC Capital itself and Shanghai Diesel Engine, the state-owned company’s engine manufacturing subsidiary, as well as financial services firm Bank of Communications International Trust and venture capital firm Shanghai STVC Group. Founded in 2012, Shang Qi Capital invests in automotive-focused companies, with a focus on new energy technologies, high-end manufacturing and the internet of vehicles. It also contributes to fund managers and publicly-listed companies, and makes private equity investments.
Qualcomm Ventures, the corporate venturing arm of mobile semiconductor producer Qualcomm, launched the $100m AI Fund to invest in AI technology developers. The initiative fits into Qualcomm’s strategy of tapping into 5G, the next iteration of mobile communications networks. Qualcomm expects 5G’s speed to drive adoption of AI capabilities on mobile devices. Quinn Li, senior vice-president of ventures at Qualcomm Technologies and global head of Qualcomm Ventures, said: “Through the AI Fund, we will continue to seek out startups, with a focus on autonomous cars, robotics, computer vision and internet of things (IoT) and that are developing new AI applications, advanced machine learning technologies and AI and machine learning platforms across different verticals.”
Toyota AI Ventures, a US-based corporate venture capital vehicle of Toyota, launched a $100m second fund. The unit was formed as a subsidiary of Toyota Research Institute in mid-2017, with a $100m first fund and a brief to invest in innovative technologies that could inform the future of transport, such as AI, autonomous mobility, big data, robotics and cloud software. TAIV has built a 19-strong portfolio in the time since which includes autonomous driving software developer Nauto, electric aircraft developer Joby Aviation and autonomous shuttle bus provider May Mobility.
Israel-based venture capital fund Maniv Mobility closed a $100m fund with a total of 12 corporate LPs including Alliance Ventures, the venture capital fund formed by automotive group Renault-Nissan-Mitsubishi. Auto parts manufacturers Aptiv and Valeo, carmakers Hyundai Motor and BMW via BMW i Ventures, oil and gas company Shell’s corporate venturing division Shell Ventures and consumer electronics producer LG Electronics also backed the fund. Deutsche Bahn Digital Ventures, the investment subsidiary of rail and logistics operator Deutsche Bahn, and car importer Carasso Motors are also among the LPs. The involvement of Lear Innovation Ventures, the corporate venture capital fund of automotive component manufacturer Lear Corporation, was also disclosed but the two remaining LPs were unclear. Maniv Mobility targets early-stage companies in the mobility sector, making investments in areas such as autonomous driving software and ride hailing technology.
Universities
In 2018, we registered 14 rounds raised by university spinouts developing transport-related technologies, a slight increase from the 12 recorded in the previous year. The level of estimated total capital deployed in 2018 stood at $233m, down from $269m in 2017. By mid-November 2019, however, we had already tracked 14 rounds, worth an estimated $216m, which suggests that interest in and valuations of enterprises emerging from academia are rising.
ClearMotion, a US-based autonomous driving system spinout of Massachusetts Institute of Technology, secured $115m in a series D round led by investment manager Franklin Templeton Investments. The round featured automotive component manufacturer Bridgestone, software producer Microsoft and mobile chipmaker Qualcomm, special interest group AARP’s Innovation Fund as well as Eileses Capital, World Innovation Lab (WIL) and NewView Capital and clients advised by JP Morgan Asset Management. Founded in 2009, ClearMotion has created what it calls a proactive ride system, a form of road-sensing technology that combines software and hardware to help driverless vehicles navigate rough roads by using sensors to help mitigate for bumps and uneven surfaces in real time. Bridgestone is one of several original equipment manufacturers ClearMotion has secured as partners, and the company has built a pilot production plant that will support the initial launches of its systems.
Tier IV, a Japan-based autonomous driving software developer backed by University of Tokyo Edge Capital, a VC firm affiliated with the institution, secured ¥11.3bn ($105m) in a series A round led by insurance firm Sompo Japan Nipponkoa. Yamaha Motor, agricultural machinery producer Aisan Technology and telecoms firm KDDI also participated in the round, along with investment firm Jafco. Tier IV is developing open-source autonomous driving software known as Autoware, which it claims is being used by about 200 companies worldwide and the US Department of Transportation’s Federal Highway Administration. The company has also formed Autoware Foundation to promote the use of Autoware in other products. Part of the series A proceeds will be used to expand internationally by extending its adoption by businesses and universities in addition to government agencies.
China-based electric car developer Byton was set to raise approximately $100m from carmaker FAW Group as part of a series C round with a $500m target, citing people familiar with the matter. Byton is reportedly seeking a valuation of more than $2.5bn in the round, though earlier reports had suggested the company was aiming for a valuation as high as $4bn. Founded in 2016 as Future Mobility, the company is working on electric cars that include smart features such as connected in-car applications, a tablet integrated in the steering wheel and a 49-inch dashboard screen. The company’s flagship model, a sports utility vehicle known as M-Byte, is set to be available for purchase in China, with plans to release the car in North American and European markets in mid-2020. Byton is also collaborating with FAW to revive the latter’s limousine brand, Hongqi, and they are working together on product development, manufacturing and sales.
US-based electric skateboard manufacturer Boosted raised $60m in a series B round that included Stanford-StartX Fund, the vehicle affiliated to Stanford University’s StartX accelerator. The round was co-led by venture capital firms Khosla Ventures and iNovia Capital, and also featured Bay Meadows. Founded in 2012, Boosted manufactures electric skateboards designed to help commuters undertake their journey to work. The boards are built to offer an “exhilarating” experience while withstanding the rigours of daily usage, and range from $825 to $1,699 in price. Boosted will invest the proceeds in the development of new light electric vehicles in addition to enhancements of its underlying technology as it seeks to build upon its market stature internationally.
People
Christian Noske was promoted to head of Alliance Ventures, the $1bn corporate venturing unit formed by carmakers Renault, Nissan and Mitsubishi. The promotion involved Noske moving back to Europe after a decade in the US. He is now based at Alliance Ventures’ head office in France, having joined the fund in California at the start of 2018. The move followed a rapid rise from analyst to partner at BMW i Ventures, where Noske made the GCV Rising Stars list in 2016 and 2017. Noske will work alongside François Dossa, CEO of Nissan Brazil since 2012, who left to lead Alliance Ventures and co-manage its formation with managing director, Matthieu de Chanville, formerly a senior executive at consulting firm Boston Consulting Group.
Hiroshi Saijou has joined Japan-headquartered carmaker Toyota as vice-president of business development and strategy at its Research Institute – Advanced Development (TRI) division. Saijou had been chief executive and then chairman of motorised vehicle manufacturer Yamaha’s corporate venturing unit, Yamaha Motor Ventures & Laboratory Silicon Valley, from 2015. Saijou had built up a strong team at Yamaha, including the hiring of Nolan Paul to develop an agricultural technology investment strategy, before handing over the CEO role to George Kellerman at the end of 2018. With regards to Toyota, Saijou said it was likely he would collaborate with Toyota AI Ventures, the US-based, artificial intelligence-focused corporate venturing unit run by Jim Adler, which falls under the TRI division.
AirAsia Group appointed Aireen Omar to lead its corporate venturing activities, adding to her existing leadership of AirAsia’s digital-focused investment arm RedBeat Ventures. Omar is now responsible for sourcing emerging technologies that fit the goals of AirAsia Group’s core airline business. Omar has been with AirAsia Group since 2006, having previously served as the firm’s CEO from 2012 until 2017. The appointment was part of a company-wide management restructuring as AirAsia looks to expand its flight booking portal, AirAsia.com, by offering auxiliary travel, e-commerce and lifestyle services..
Go-Ventures, the corporate venture capital unit formed by Indonesia-based ride hailing service Go-Jek, appointed Aditya Kumar as vice-president of investments. Go-Jek announced the formation of Go-Ventures in August 2018. Kumar had been vice-president of corporate development for the company since May 2018, having previously spent some two-and-a-half years as a senior investment associate at VC fund Openspace Ventures. He had also been a VC associate at SoftBank.
David Parfett, the head of Qantas’s Innovation and Ventures unit, left for Australia-based shopping centre operator Scentre Group as general manager of strategy and business development. Parfett had originally joined the airline in 2011 as a senior manager of group strategy before being promoted to head of strategy and innovation in 2014 and running the corporate’s innovation and ventures team from late 2016. During a two-year stint, Parfett helped Qantas form its innovation and ventures strategy, and set up corporate venturing unit Qantas Ventures in 2017 to make investments in early and growth-stage technology developers. Qantas invested in portfolio companies including airline capacity management platform Volantio, data collaboration software provider Data Republic and online pet care services marketplace Mad Paws.
Germany-headquartered ship owner and operator Schulte Group launched a corporate venture capital arm dubbed Innoport. It will conduct early-stage investments in maritime and logistics-focused startups globally, emphasising on Europe and Asia. It will form business alliances with portfolio companies and help them implement pilot projects in the group’s Bernhard Schulte Shipmanagement (BSM) subsidiary. Schulte has appointed Yiannis Sykas, Cyprus-based director of strategy and product development at BSM, as managing director of Innoport. Niklas Koerner and Haymon Sinapius, who are respectively based in Germany and Singapore, were named investment managers.
GM appointed John Du, director of GM China Advanced Technical Centre, to an investment manager role at its corporate venturing subsidiary, GM Ventures. Du was a general manager at chipmaker Intel’s China-based research centre for nearly four years from 2005 before joining GM’s research and development centre in Shanghai in 2009 and becoming chief technologist at GM China in mid-2019. Jon Lauckner, chief technical officer of GM and president of GM Ventures, told Global Corporate Venturing: “We made an arrangement with GM China leadership to define two specific roles for John. The first role is an investment manager for GM Ventures, responsible for evaluating investments in early-stage startup companies with a special focus on China. In the second role, John will be the chief technologist for China [where he] will provide support to the president of GM China on technical topics that pertain to the China automotive landscape and their impact on GM China.”
Server Agirman left energy management technology producer Schneider Electric’s corporate venturing unit to become director of new ventures at engine equipment manufacturer Mitsubishi Electric Automotive America. Agirman spent more than four years running Schneider Electric Business Incubation Program in Silicon Valley as a part of Schneider Electric Ventures along with the company’s Innovation at the Edge program. As part of the incubator, Agirman co-founded eIQ-Mobility, a US-based startup backed by Schneider Electric that is working on technology that could enable and accelerate electric mobility at scale.
Amish Parashar left YMVSV to join venture capital service provider U First Capital. Parashar will assume an adviser role at U First, a corporate-focused VC service firm co-founded in November 2018 by Sanjit Singh Dang and Ekta Dang, both alumni of Intel Capital, semiconductor and data technology provider Intel’s corporate venturing unit. U First helps corporate clients identify innovation opportunities through startups and universities. It announced it was partnering specialty chemicals and materials supplier DowDuPont’s electronics and imaging segment to source IoT and AI deals.
Joshua Berg stepped down from his position as investment manager at GM Ventures, the corporate venture capital arm of General Motors. Prior to joining GM Ventures in 2016, Berg held various managerial roles at its parent company and its security and roadside assistance service, OnStar. He came from law firm Zausmer, Kaufman, August, Caldwell & Tayler, where he maintained a litigation practice until 2010. The unit focuses on automotive and smart mobility technology and its investments include autonomous driving technology developer Nauto and electric bus producer Proterra.
Kasper Sage was promoted from principal to partner at BMW i Ventures. The promotion came in the wake of Sage being chosen as one of Global Corporate Venturing’s 2019 Rising Stars recipients. He had sourced three deals led by the unit, led two deals himself and helped close six new investments since he joined in July 2017.
Christina Heggie left her role as investment principal at JetBlue Technology Ventures, US-based airline operator JetBlue’s corporate venturing subsidiary, to join Google. Heggie told GCV her new role would be in the Google Partnerships organisation, helping Google strengthen its partnerships in the travel industry. Heggie joined JTV in 2016 as an investment associate before being promoted in late 2017. She had previously worked in a senior marketing role for Checkmate. Heggie led deals and sat on the boards of hotel booking app developer Recharge, air miles gifting platform Skyhour, flight-delays prediction service Lumo, electronic ticketing platform developer Redeam and baggage delivery services provider Unicoaero.
BMW i Ventures promoted senior associate Baris Guzel to principal. Guzel joined BMW i Ventures in 2017 after six months as a venture capital associate at VC firm Presidio Partners. He had previously spent a year working as a technology investment banking associate at financial services firm Deutsche Bank. During his time at the unit, Guzel has taken board observer positions at security tool developer Vera Security, on-demand manufacturing platform developer Xometry and street-level mapping data provider Mapillary. Guzel has also been involved in the fund’s investment in cybersecurity software developer Claroty, electric vehicle charging station operator Chargepoint and virtual training software provider Strivr.
Toyota AI Ventures hired Erin Keller as an associate. Keller had spent two years from April 2017 at YMVSV, where she was an associate before she was promoted to senior associate in December 2018, featuring in Global Corporate Venturing’s Rising Stars roster the following month. TAIV launched a $100m second fund that will focus on fields such as AI technology for use in transport and autonomous mobility.
Yamaha hired Nolan Paul from US-based fruit supplier Driscoll’s to develop its agricultural technology (agtech) corporate venturing practice at its Silicon Valley innovation hub. As head of research and development strategy and emerging technology, Paul led Driscoll’s agtech investment portfolio for four years, looking at genetics, phenotyping, automation and robotics, biologicals, plant sensing, controlled environment, post-harvest practices and data analytics. Paul is now general manager for agricultural robotics and data at YMVSV.
The global transport sector and its ecosystem encompasses a wide range of transportation services – including road, rail, air and marine – as well as the manufacturing of means of transportation, such as automotive, aviation and so on.