GCV Analytics defines the transport sector as encompassing ride-hailing, car-sharing and rental in addition to connected, autonomous and electric vehicle technologies, vehicle marketplaces and platforms, public mobility and parking, vehicle hardware and maintenance, and other subsectors.
The global transport sector and its vast ecosystem were estimated at nearly $6 trillion in 2017 – $5,880bn, according to ResearchAndMarkets.com. This includes a wide range of modes of transportation services, including road, rail, air and marine, in addition to the manufacturing of means of transportation, such as automotive, aviation etc.
However, when it comes to mobility on the consumer level, some have coined and popularised the term “Aces” – autonomy, connectivity, electrification, sharing – to denote the disruption taking place in the industry. While the interest of corporate venture investors in connected car technology appears to have waned in recent times, according to our data, businesses from the ride-hailing, autonomous driving and electric vehicle realms have been all over the news.
It is difficult to estimate the total investment in autonomous and electric vehicle technologies and business models. The Brookings Institute estimated the size of the autonomous technology ecosystem at $80bn at least. There have been similar estimates of the electric vehicle ecosystem.
The technical viability of such technologies has been enabled thanks to significant advances in other fields, such as artificial intelligence, sensors and battery technologies. The potential mass adoption of autonomous and electric vehicles is expected to bring about safer travel while reducing the environmental impact of burning fossil fuels.
If both technologies are so promising and possible in the near term, what are the potential stumbling blocks on the road to their massification? As with any innovative technology, those have to do mostly with consumer perception. According to data from the 2018 Deloitte global automotive consumer study, while there has been some visible growth in the number of consumers who consider autonomous vehicles safe, there is still much room for improvement and persuasion.
In the world’s major automotive market, the US, 47% of respondents felt such vehicles would not be safe – a figure significantly lower than the previous year’s 74%, but more than half of consumers still need to be convinced. The same conclusion could be drawn for other major automotive markets, including Germany, France and South Korea.
In the case of electric vehicles, there is an additional issue of consumer perception. Most in markets like China and anxiety over being able to drive on a single battery charge, or about availability of charging stations are the major reasons for not purchasing such vehicles.
An additional problem is the monetisation of autonomous and electric technologies. Deloitte’s survey found that a sizeable proportion of consumers in major markets – Germany 50%, US 38%, Japan 31% – are unwilling to pay a premium for vehicles equipped with autonomous or semi-autonomous capabilities. According to the study, this is also true for electric vehicles – only 42% of consumers in Germany are willing to accept the higher cost of vehicles with alternative powertrain technology.
As price premiums are the major reason for consumer hesitance and, without them, the research and development costs associated with developing such technologies cannot be recouped, this may well threaten their economic viability. This is why incumbent automotive manufacturers have turned to startups, aiming to support and source external innovation in this space.
If the market adoption challenges are properly addressed and tackled in the coming years by marketers and automotive manufacturers, there is an opportunity for incumbents in the automotive industry. According to the Deloitte study, most consumers indicate they would be more likely to ride an autonomous vehicle of a brand they trust – 63% in the US. This implies that, while emerging brands such as Tesla will have their place on the roads of the future, most autonomous and electric cars are likely to be produced by the automotive brands consumers are already familiar with. This also implies that promising emerging businesses in this sector are more likely to find their place as suppliers to major brands.
The automobile industry in general is expected to grow. According to a Euler Hermes report, the automotive market is likely to exceed 100 million units this year. Worldwide sales of new vehicles are forecast to grow by 2.5%. These predictions are largely based on broader trends in private consumption and corporate investment, alongside low interest rates and rising incomes. These forecasts are made even within the context of a growing sharing economy, favouring use over ownership of motor vehicles. It is not, therefore, unreasonable to suppose corporate venturers will continue to back businesses that run e-commerce platforms selling vehicles or other service platforms for motor vehicles.
The other major realm of disruption in the transport sector is ride-hailing – where there have been significant sums invested in major markets. Ride-hailing enables customers to book a short-distance journey via connected mobile devices, whether car or bicycle. This innovative business model reduces traffic congestion and CO2 emissions and rationalises transport use in urban environments. This model has disrupted established service providers, such as taxis, and there have been and will be regulatory and legal challenges.
There are also concerns about the profitability and economic viability of the business model, given the intense competition. According to a report by Energias Market Research, the world’s ride-sharing market is forecast to experience a cumulative annualised growth rate of 16.4%, worth $149bn by 2024. This growth is assumed to be driven by demand for greener mobility and on-road traffic reduction in markets that are experiencing rapid urbanisation, particularly the Asia-Pacific region, China and India.
Airlines are focused on increasing revenues and profit margins. According to a report – Air Transportation Market Global Briefing 2018 from Researchandmarkets.com – intense competition is forcing them to seek alternate sources of revenue, including from ancillary services. Airlines would be interested in any technology bringing efficiencies and lowering operating costs. The report estimates the global air transport market at roughly $650bn in 2017.
The rise of vertical take-off and landing technology, used in many unmanned aerial vehicles, along with cheaper battery technology costs, have raised questions as to whether flying cars rather than electric and autonomous cars will define the future of short distance mobility. US-based airline JetBlue has already backed a company, Joby Aviation, which is developing electric-powered aircraft.
In the context of smart cities and ever smarter and greener vehicles, there is a new type of public mobility, which – enabled by the ubiquity of mobile devices – includes everything from planning a journey or a commute through booking a ride or a parking space, anything from parking and public transit apps through intelligent public transport ticketing system to electric and hybrid buses. With growing environmental and emissions concerns among public authorities, demand for the latter is likely to grow. As MarketResearch.com states, “with the advancements in technology the demand for battery electric buses is projected to grow at the fastest rate in coming years”.
For the period between November 2017 and October 2018, GCV reported 148 venturing rounds involving corporate investors from the transport sector. Nearly half (71) took place in the US, 15 in China and 11 in India.
Many of those commitments (66) went to emerging enterprises from the same sector (mostly ride-hailing, developers of connected, autonomous and electric vehicle tech as well as vehicle marketplaces) but also with the remainder going into companies developing other technologies in synergies with the sector: 25 deals in the industrial sector (mostly 3D printing, advanced materials, robots and unmanned aerial vehicles), 19 in IT (primarily artificial intelligence technologies and cybersecurity) and 17 in business services (mostly logistics and supply chain services).
The network diagram showing co-investments of transport corporates illustrates the wide spectrum of investment interests of the sector’s incumbents. The commitments range from ride-hailing and car rental services (Grab, Taxify, Lime) and developers of electric vehicle for mass transport (Proterra and May Mobility), additive manufacturing (Desktop Metal, Seurat Technologies) through artificial intelligence and machine learning tech with applications in automobiles (Nauto, ThinCI, SoundHound) to airline capacity management software (Volantio), electric aircraft (Joby Aviation) and even hyper-local weather forecasting (ClimaCell). All these co-investments match the overall trends in the transport sector outlined above and the respective areas of interest they entail.
On a calendar year-on-year basis, total capital raised in corporate-backed rounds went up significantly from $5.78bn in 2016 to $12.04bn in 2017, a 108% increase. The deal count also grew by nearly 60% from 88 in 2016 to 140 in 2017. As for 2018, by the end of October, GCV had reported 128 deals worth an estimated $6.04bn.
The 10 largest investments by corporate venturers from the transport sector were concentrated in the same industry.
The leading corporate investors from the transport sector in terms of largest number of deals were aircraft producer Boeing and carmakers BMW, Toyota and Daimler. The list of transport corporates committing capital in the largest rounds was topped by ride-hailing service provider Didi Chuxing, followed by Toyota, Daimler and BMW.
The most active corporate venture investors in emerging transport companies were telecoms firm and conglomerate SoftBank, e-commerce company Alibaba as well as internet companies Baidu and Tencent.
The rising transport businesses in the portfolios of corporate venturers varied, encompassing anything from ride-hailing (Lyft, Grab and Zoomcar), bicycle and scooter rental services (Ofo and Lime) through public transit information apps (Moovit), autonomous driving software developers (Pony.ai) and electric vehicle producers (Xiaopeng Motors) to online vehicle marketplaces and platforms (Shift and Chehaoduo). This is illustrated by the network diagram of corporate co-investments in such companies.
Overall, corporate investments in emerging transport-focused enterprises went up significantly from 138 rounds in 2016 to 199 deals in 2017 and stood at 155 by the end of October 2018. Estimated total dollars went up from $21.74bn in 2016 to $30.74bn in 2017 and stood at $21bn by October 2018.
Deals
Transport sector corporates invested in large multimillion-dollar rounds, raised by enterprises in the same sector. Two of the top 10 rounds stood at $1bn.
China-based on-demand bicycle rental service Ofo raised $1bn from investors including Alibaba. The other participants in the round, which valued Ofo at $3bn, were not disclosed but reports suggested they included SoftBank and Didi Chuxing. Ofo runs an app-based bicycle-sharing service equipped with 10 million bikes across 200 cities, most in China, although it also has a presence in European centres such as London, Madrid, Milan, Vienna and Prague.
Singapore-based ride-hailing company Grab obtained $1bn from Toyota at a valuation of more than $10bn. The money came directly from Toyota, rather than through its investment vehicle Next Technology Fund, which had also taken part in Grab’s $2.5bn series G round previously. Founded in 2012 as GrabTaxi, Grab started out with taxi-booking platform MyTeksi but has since grown to offer a full range of ride-hailing services, including chauffeuring and carpooling. Grab has also introduced a food delivery service and a mobile payment platform. It operates in eight Southeast Asian countries.
Didi Chuxing acquired a majority stake in Brazil-based counterpart and portfolio company 99, paying $600m. Reportedly, Didi previously owned 30% of 99, having led a round in excess of $100m the previous year. Founded in 2012 and originally known as 99taxi, 99 runs an on-demand ride service with 14 million users in 500 Brazilian cities and towns.
China-based smart car developer Byton closed a $500m series B round that included automotive manufacturer FAW Group and battery producer Contemporary Amperex Technology. TUS Holdings, the enterprise arm of Tsinghua University, also took part in the round alongside other unnamed backers. FAW was previously reported to be supplying $260m to the round, though this was not confirmed. Founded in 2016 as Future Mobility, Byton is developing smart electric vehicles that boast features such as a gesture-based control system, a driver-assistance system, augmented reality mirrors instead of rear-view mirrors and a 49-inch electronic display on the dashboard. The series B funding will help Byton advance towards mass production, targeting the fourth quarter of this year.
China-based bicycle-sharing startup Hellobike secured $350m in a funding round featuring carmaker WM Motor Technology and Ant Financial, the financial services affiliate of Alibaba. The round, which included venture capital firm Chengwei Capital, came just over a month after Hellobike merged with Youon Ditan, an affiliate of publicly-listed bicycle-sharing service Changzhou Youon Public Bicycle System. Founded in 2016, Hellobike operates an app-based bike-sharing platform with more than 80 million users. In contrast to some of the industry’s biggest operators, it concentrates on third and fourth-tier cities in China rather than the country’s largest urban centres.
US-based electric scooter rental service Lime raised $335m in a round led by GV, a corporate venturing vehicle of internet and technology conglomerate Alphabet. GV was joined by its parent company as well as ride-hailing platform Uber, financial services group Fidelity Management and Research, venture capital firms Institutional Venture Partners, Atomico, Andreessen Horowitz and Fifth Wall Ventures, investment firm Coatue Management and Singaporean sovereign wealth fund GIC. The round reportedly valued the company at $1.1bn. Founded in 2017 as LimeBike, Lime operates a service that enables users to rent e-scooters, pedal bikes and electrically-assisted bicycles. It is available as a smartphone app but the company also accepts cash payments from customers without mobile devices.
China-based bicycle-rental platform Mobike spent RMB2bn ($308m) to launch car-sharing service Mobike Chuxing. The service can be accessed through Mobike’s app, which had more than 200 million registered users across 180 cities as of November 2017. Subsequently, it was reported that FAW Group had paid an undisclosed amount for a 10% stake in Mobike Chuxing Technology. FAW, which disclosed the investment in a stock exchange filing, will supply electric vehicles for Mobike Chuxing as part of a strategic cooperation agreement. Mobike has raised more than $1bn from investors including Tencent, travel services provider Ctrip, hospitality chain Huazhu Hotels and Bertelsmann Asia Investments, a corporate venturing subsidiary of media group Bertelsmann.
Renrenche, a China-based operator of an online used vehicle marketplace, received $300m from investors including Didi Chuxing. Tencent also backed the round, which was led by investment banking firm Goldman Sachs. Founded in 2014, Renrenche operates an e-commerce platform for second-hand cars that is active in more than 80 cities across China. The company is also looking to develop financing services and plans to explore opportunities in the after-sales market in partnership with Didi, which expects to purchase a million used and new cars through Renrenche over the next three years.
SoftBank led a $300m series D round for US-based car-sharing service Getaround that included Toyota and unnamed “inside investors”. Getaround runs an app-based service that enables users in 66 US cities to lease their cars to each other an hour or a day at a time. It provides up to $1m in motor insurance cover and roadside assistance. Toyota signed a strategic partnership with Getaround in 2016, as did Uber, which has offered Getaround to its own users through a joint venture called Uber Rent.
China-based smart car developer Banma Network Technologies closed a RMB1.6bn round backed by Shangqi Capital, the investment management unit of car manufacturer SAIC Motor. The round was led by SDIC Innovation Investment Management, a part of government-owned investment holding group State Development and Investment Corporation, and also featured private equity firm Yunfeng Capital. Founded in 2015 as a joint venture between Alibaba and SAIC Motor, Banma is working on cars that exploit internet-of-things technology. The company has launched one model, the Roewe RX5. The Roewe brand is owned by SAIC Motor, which handles the design and physical assembly of the RX5, while Alibaba provides its smart car operating system AliOS.
There were interesting deals in emerging transport-focused businesses backed by corporate investors from other sectors.
Didi Chuxing closed a $4bn funding round that included SoftBank and Abu Dhabi’s Mubadala Investment Company, according to a source who said the deal valued the company at $56bn. Didi Chuxing runs a Chinese ride-hailing platform with 450 million registered users. In addition to taxis, it also offers car rental, carpooling, luxury and business transport, designated driver and urban bus services. The company said part of the funding would be used for an international expansion that would start with Taiwan, where it has licensed its brand to local operator Ledi Technology.
Alibaba bought $3bn worth of shares in China-based bicycle-rental platform Ofo from investor Allen Zhu. Alibaba reportedly acquired the shares at a $10bn valuation, though the stake was probably held by GSR Ventures, the venture capital firm that backed Ofo at series A, B and C stage, of which Zhu is managing director. Founded in 2014, Ofo runs an app-based bicycle-rental platform that had 200 million registered users worldwide at the end of 2017. It has 10 million bikes in service across 250 cities in 22 countries.
SoftBank agreed to provide $2.25bn for GM Cruise Holdings, an autonomous driving spinoff of automotive manufacturer General Motors (GM). Cruise is developing autonomous vehicle technology that will be deployed in GM’s Bolt range of electric vehicles. The technology is being tested in the US states of California, Arizona and Michigan, and is expected to reach the market this year. The company was formed in 2013 and GM paid $1bn to acquire it in early 2016, giving an exit to Qualcomm Ventures, the venturing unit of the chip manufacturer.
US-based ride-hailing platform Lyft raised $1.5bn in a round led by CapitalG, the growth equity arm of Alphabet. E-commerce firm Rakuten also took part, as did Fidelity Investments, Ontario Teachers’ Pension Plan, AllianceBernstein, Baillie Gifford, KKR and Janus Henderson, according to a statement from Lyft. The transaction valued the company at $11.5bn post-money. Lyft’s on-demand ride service is the second most popular in the US, behind Uber.
SoftBank closed its $1.25bn equity investment in US-based on-demand ride provider Uber. The funding was provided at a $69bn valuation as part of a larger deal in which a consortium of SoftBank, investment firm Dragoneer, venture capital firm Sequoia Capital and private equity firm TPG bought a reported $9bn of secondary shares from early investors and employees at a $48bn valuation. Uber is the US market leader in the on-demand ride sector and has a similar position in several other markets, boasting a presence in more than 80 countries across six continents. The primary share valuation means it retains its position as the world’s most valuable venture capital-backed private company.
China-based smart electric vehicle developer Nio secured more than $1bn in a round led by Tencent. The round, which valued the company at about $5bn, included hedge fund Lone Pine Capital, asset manager Citic Capital and investment firm Baillie Gifford. Another internet company, Baidu, was set to co-lead the round but did not confirm its participation. Founded as Nextelectric, Nio is working on an electric autonomous car equipped with a personalised digital assistant that it aims to bring to market by 2020. It has already created a “supercar” called the EP9, said to be the fastest electric vehicle in the world.
Evergrande Health Industry, a healthcare subsidiary of property developer China Evergrande, bought a 45% stake in US-based electric vehicle developer Faraday Future for $860m. Other Faraday shareholders will retain 33%, with the remaining 22% held back for employees. Founded in 2014, Faraday Future is developing connected electric cars. The company’s first production vehicle was unveiled in 2017 and will boast features such as autonomous parking capabilities and facial recognition.
Tencent led an $818m series C round for China-based automotive e-commerce platform Chehaoduo. Shougang Fund, an investment branch of steelmaker Shougang, and ICBC International, a subsidiary of Industrial and Commercial Bank of China, also took part. Chehaoduo was formerly known as Guazi, which is still the brand under which its used car trading platform operates, but the company has expanded into new car sales through a brand called Maodou as well as online vehicle auctions and adjacent services such as insurance and appraisal. The company, which has also moved into vehicle leasing, reportedly holds a 68.3% share of the used vehicle auction market in China.
Exits
Corporate venturers from the transport sector completed seven exits between November 2017 and October last year – four acquisitions and three initial public offerings. On a calendar year-on-year basis, GCV also reported seven exits in 2017, down from the 11 tracked in 2016.
China-based local services platform Meituan Dianping raised $4.22bn in an IPO that included a $400m investment by Tencent. Meituan Dianping issued 480 million primary shares on the Hong Kong Stock Exchange at HK$69 ($8.79) each, near the top of the IPO’s HK$60 to HK$72 range. The offering valued the company at about $52bn. Established through the 2015 merger of group buying platform Meituan and restaurant listings service Dianping, Meituan Dianping operates an online portal that links to a range of services including food delivery, travel booking and event ticketing.
Pivotal Software, a US-based software development services provider spun out of software producer EMC, closed its IPO at just over $638m, after underwriters bought 5.5 million additional shares. The IPO initially consisted of 33.1 million shares at $15 each on the New York Stock Exchange, in addition to almost 3.9 million shares sold by industrial technology and appliance manufacturer General Electric. Other investors in Pivotal included EMC subsidiary VMware and automotive manufacturer Ford. The shares closed at $18.14, giving it a market capitalisation of $4.54bn. Spun out of EMC, which was renamed Dell EMC when acquired by computing technology producer Dell in 2016, Pivotal supplies software development technology as well as expertise to clients looking to create customised applications.
Cango, a China-based automotive sales service provider backed by corporates Tencent, Taikang Life Insurance and Didi Chuxing, floated in the US in a $44m IPO. The offering consisted of 4 million American depositary shares (ADSs) at $11 each issued on the New York Stock Exchange. The company had initially targeted $300m for the IPO before setting a $10 to $12 range for 12.5 million shares. Cango operates an online platform that connects car dealers, buyers and financial institutions, helping to leverage financing for vehicle sales and provide after-sales services. It generated $55.6m in net income in 2017 from almost $168m in revenue.
NewMotion – a Netherlands-based electric vehicle charging station operator backed by vehicle distributor AutoBinck, energy distributor Alliander – was acquired by oil and gas company Shell for an undisclosed amount. Founded in 2009, NewMotion enables electric vehicle owners to charge their cars at more than 50,000 charging points across 22 countries. The stations draw their power primarily from renewable energy sources, and corporate clients can track the usage of each driver in their fleet through a cloud-based platform.
BMW acquired US-based parking space booking service and portfolio company Parkmobile for an undisclosed amount, allowing travel services provider BCD Group to exit. BMW had invested an undisclosed amount in Parkmobile in 2014. Parkmobile’s platform enables motorists to hire parking bays through a mobile app which has more than 8 million registered users. BMW could adapt the company’s software to allow drivers of its vehicles to hire parking spaces through in-car software. It has already integrated Parkmobile’s services with its own parking location and booking app, ParkNow.
Industrial technology and appliance producer Robert Bosch acquired US-based carpooling platform Splitting Fares for an undisclosed sum, allowing carmaker Jaguar Land Rover’s InMotion Ventures subsidiary to exit. The acquisition was InMotion’s first exit. Founded in 2015, Splitting Fares has created an online platform that enables partner organisations such as businesses, universities and municipal authorities to organise ride-sharing for their staff members. It has about 140,000 users across the US, Mexico and Germany.
Petroleum supplier BP acquired Chargemaster, the UK-based operator of a network of electric vehicle charging points, for an undisclosed amount, allowing BMW to exit. Founded in 2008, Chargemaster designs, builds and installs electric vehicle chargers, and currently operates a network of 6,500 charging points across the UK involving both public and in-home systems. It receives money through a mix of subscription and pay-as-you-go fees. BP made the acquisition to support the installation of charging points on its garage forecourts.
Global Corporate Venturing also reported exits from emerging transport-related enterprises involving corporate investors from other sectors.
Meituan-Dianping bought China-based Mobike for $2.7bn. The transaction was reportedly being brokered by Pony Ma, chief executive of Tencent, which also owns a stake in Meituan-Dianping. Founded in 2015, Mobike operates an app-based, dockless bike-sharing service that has attracted hundreds of millions of registered users. The company launched a service in Paris in January 2018.
Nio – a China-based smart electric car developer with domestic corporates Tencent, Baidu, electronics manufacturer Lenovo and e-commerce portal JD.com as investors – raised about $1bn when it floated on the New York Stock Exchange. The IPO consisted of 160 million American depositary shares at $6.26 each, almost at the bottom of the $6.25 to $8.25 range the company had set. It valued Nio at $6.4bn.
Yixin Group, a China-based e-commerce marketplace operator spun out of automotive transaction services provider BitAuto, raised HK$6.77bn ($867m) in its IPO. The company issued almost 879 million shares on the Hong Kong Stock Exchange priced at the top of the IPO’s HK$6.60 to HK$7.70 range. Its stock opened at HK$10 and briefly reached HK$10.18 before closing at HK$8.12, giving it a market cap of about $6.54bn. Yixin runs an online platform that functions as a marketplace for vehicles and also provides leasing as well as financing for car purchases.
Uxin, a China-based automotive e-commerce platform backed by corporates Baidu, Legend Holdings and Tencent, floated on the Nasdaq Global Select Market, after having set its pricing range at $10.50 to $12.50. The company issued 38 million American depositary shares, representing 114 million ordinary shares. The company raised $225m, although it was expecting to raise up to $547m but was priced below the low end of its range. Founded in 2011, Uxin runs an online marketplace for used vehicles that includes tailored recommendations and related services such as insurance, financing, warranty and delivery. It also operates an auction-based service for businesses buying fleet vehicles.
China-based bicycle-sharing platform Bluegogo transferred its operations to its local peer Biker. Founded in 2016, Bluegogo operated a network of stationless bicycles that users can book, unlock and pay for through a mobile app. The company claims to have more than 20 million users. The company had reportedly fallen $30m into debt following its inability to secure series B capital, and competitors Ofo and Mobike both refused the option of an acquisition. Bluegogo has also suffered bad press – it was reported that the startup stopped paying staff and delayed wages until February 2018, amid allegations that the company’s CEO Li Gang had absconded.
Ride-hailing company Ola acquired India-based operator of public transport tracking app Ridlr, backed by media firm Times Group and Qualcomm, for almost $50m. Founded in 2010, Ridlr has created a platform for buying tickets for public transport in 17 cities across India. The platform also monitors traffic jams using internet-of-things technology. Ola has not specified how it intends to integrate Ridlr into its own offering, only noting that it will add new technology and features to its product, allowing it to expand into additional locations.
IT service provider Fram Skandinavien bought the Vietnam arm of Carmudi, a car classifieds platform backed by e-commerce group Rocket Internet, for $50,000. Carmudi is an online classifieds portal for buying and selling new and used cars, motorcycles and commercial vehicles. Aside from the Vietnam incarnation, launched in 2014, it is available in six Asia-Pacific markets as well as Mexico, Qatar, Saudi Arabia and United Arab Emirates. Carmudi was founded in 2013 by Rocket Internet and raised $10m in series A funding the following year with contributions from Tengelmann Ventures, the corporate venturing arm of retailer Tengelmann, and other undisclosed investors.
Navdy, a US-based visual driving technology developer backed by Qualcomm, reached out to creditors as it prepared to liquidate, using a process known as “general assignment for the benefit of creditors”. Founded in 2013, Navdy had created a control-based display for drivers to show information from their smartphone in the line of sight. The news about the liquidation process followed months of speculation about whether Navdy was still in business. Its social media accounts fell silent and customers have reportedly been unable to contact anyone at the company.
Funds
Between November 2017 and October 2018, corporate venturers and corporate-backed VC firms investing in the transport sector secured over $4.25bn via 23 funding initiatives, including four VC funds, four new venturing units, two accelerators and three other initiatives.
On a calendar year-to-year basis, funding initiatives more than doubled in number – from 15 in 2016 to 32 in 2017 – but then dropped to 18 by the end of October 2018. Total estimated capital followed a similar trail – from $1.57bn in 2016 to $5.59bn in 2017 and then down to $3.99bn by October last year.
Singapore-based logistics provider GLP launched a $1.6bn investment fund to target the logistics ecosystem in China. The fund will be managed by Hidden Hill Capital, the private equity arm of the corporate’s local subsidiary, GLP China. Limited partners include unnamed insurance providers and long-term institutional investors, such as investment firm China Post Capital. The company has $50bn of assets under management, much of which is concentrated in real estate, and it expects to establish additional funds in future. The fund will invest in adjacent growth sectors that complement GLP’s real estate business, with a focus on companies employing technology to enhance efficiency in the logistics industry.
Automotive manufacturing partnership Renault-Nissan-Mitsubishi launched corporate venturing fund Alliance Ventures to invest up to $1bn in startups. The unit intends to provide up $200m to startups and open innovation projects in its first year of operation – the $1bn is available over a five-year period. The alliance, initially formed when France-based Renault and Japan-based Nissan exchanged equity stakes in 1999, was extended in 2016 when Nissan acquired a 34% share of Japan-based Mitsubishi. The unit will target mobility technologies such as automotive electrification, vehicle connectivity, artificial intelligence and autonomous systems. It will invest at all stages of company development as well as incubating new businesses.
B Capital Group, a US-based investment firm sponsored by management consultancy Boston Consulting Group (BCG), closed an oversubscribed venture capital fund at $360m. Founded in 2015 in partnership with BCG, B Capital targets global investments in healthcare, financial and insurance technology, transportation and industrial logistics, and what it refers to as consumer enablement. B Capital Fund had reached its first close at about $144m in 2016, and co-founders Eduardo Saverin and Raj Ganguly hinted at the time that the firm was aiming for a final close of about $250m.
Grab launched investment arm Grab Ventures to invest in eight to 10 startups over the next two years. The company will also operate an accelerator program, Velocity, targeting growth-stage businesses, in addition to incubating new services from within Grab. Velocity will accept four to six companies per cohort. Grab has recruited Singapore government agencies Info-communications Media Development Authority of Singapore and Enterprise SG as partners. Grab Ventures will invest across Southeast Asia.
China-based private equity firm Cathay Capital launched a RMB1.5bn ($226m) automotive technology fund, with 25% of the capital coming from automotive components supplier Valeo. Yangtze River Industry Fund, a vehicle formed by the government of Hubei province, and Valeo are the cornerstone investors in CarTech Fund, which also received backing from undisclosed additional investors. CarTech Fund will invest in China-based car and new mobility technology developers over a four-year period. The fund will focus on electrification, digital mobility, and autonomous and connected car technology, as China’s transport industry gears up to introduce autonomous vehicles.
Baidu launched a $200m venture capital fund in partnership with Singapore-based mobility and artificial intelligence technology provider Asia Mobility Industries. The Apollo Southeast Asia fund was formed to support Baidu’s autonomous driving software platform, Apollo, and will invest in autonomous driving and smart transportation technology developers. In addition to venture capital investments, the fund will provide capital for advanced mobility research projects, technology exchange and deploying Baidu’s driverless vehicle technologies in Southeast Asia.
Aerospace and defence company Lockheed Martin doubled to $200m the level of funding its corporate venturing arm Lockheed Martin Ventures holds under management. The additional $100m followed tax form legislation in the US and will primarily go to early-stage startups in the areas of sensor technologies, autonomy, artificial intelligence and cybertechnology. The fund will invest in sectors such as autonomy and advanced manufacturing. The increased funding for the corporate venturing division forms part of a $460m commitment Lockheed Martin is making across its business operations.
US-based early-stage venture capital firm Aspect Ventures closed its second fund at $181m, having raised capital from limited partners including networking equipment manufacturer Cisco. Investment firm Knollwood Investments has also committed to the fund, as has Melinda Gates, co-chairwoman of philanthropic organisation Bill & Melinda Gates Foundation. Aspect Fund II will invest in early-stage technology startups, following the model of the firm’s $150m first fund, which was launched in 2015 to target sectors such as cybersecurity, digital health, autonomous driving and artificial intelligence.
US-based insurance firm State Farm started $100m corporate venturing fund State Farm Ventures. State Farm’s core business involves life, health, property and casualty insurance as well as financial services products, but it has also moved into areas such as home automation, connected care and backup energy technology. The company did not disclose any venturing investments but it runs open innovation and research hub 485 Think Lab, and was one of 11 corporates providing $11m for autonomous vehicle research lab Mcity in November 2017.
Japan-based automotive component maker Aisin Group launched a $50m US-based investment fund in partnership with venture capital firm Fenox Venture Capital. Fenox will manage the fund, with CEO Anis Uzzaman as general partner. Aisin will provide capital as a limited partner and will offer portfolio companies help to expand in Asia. The fund will look to invest in Silicon Valley-based startups developing automotive technologies that involve the confluence of hardware and software. Areas that will be considered include autonomous driving, zero-emission and connected vehicles, artificial intelligence, the internet of things, and augmented and virtual reality.
People
Christian Noske joined the $1bn corporate venturing fund formed by automotive alliance Renault-Nissan-Mitsubishi. Noske was appointed managing director of Alliance Ventures, which received 40% of its capitalisation from each of Renault and Nissan, while Mitsubishi suppled the other 20%. Noske will work alongside François Dossa, chief executive of Nissan Brazil since 2012, who left his old position to lead Alliance Ventures and co-manage its creation with its deputy head, Matthieu de Chanville, formerly a senior executive at consulting firm Boston Consulting Group. Alliance Ventures hired Noske from a BMW i Ventures, the corporate venture capital unit of the eponymous Germany-based car maker, where he was a partner.
Sherwin Prior left General Motors’ corporate venturing unit, GM Ventures, to set up venture capital firm Blue Victor Capital. Prior joined GM Ventures in September 2010 and was “responsible for a range of activities including GM Ventures strategy, operations, deal-sourcing, deal negotiations and ongoing portfolio management”, he said. Wade Sheffer joined corporate venturing unit GM Ventures as managing director following the departure of Sherwin Prior. Before joining GM Ventures, Sheffer was executive director of chassis purchasing at GM. He joined GM in 1996 as a test engineer at the Milford proving ground. In 1999, he transitioned to the North America outbound logistics quality team and was based in Germany from 2002 to 2005. Sheffer relocated to Shanghai, China, in 2006 as deputy executive director at Shanghai General Motors in charge of purchasing. In 2009, he returned to the US where he held various leadership positions in global purchasing and supply chain.
Katherine Grass left travel services provider Amadeus, having established its Amadeus Ventures unit, for a venture partner position at travel-focused venture capital firm Thayer Ventures. Grass originally joined Amadeus in 2006 in a corporate strategy role before head its new corporate venturing subsidiary when it was formed in 2013. She was promoted to global head of innovation for the company the following year.
Nathan Yu, former vice-president of China-based carmaker Geely Holding Group, joined Nio Capital, the corporate venturing unit backed by Nio, as its fourth managing partner. Yu joined fellow managing partners William Li – also Nio’s founder and chairman – Ian Zhu, who was formerly at Tsinghua Holdings’ Tsing Capital unit, and Junyi Zhang, who used to head automotive activities at consultancy Roland Berger China.
Aditya Kumar, an experienced corporate venture and venture capitalist in Southeast Asia, joined Indonesia-based on-demand ride provider Go-Jek as vice-president of corporate development. The move took place while Go-Jek was in the process of raising up to $1.5bn, at a reported $4bn valuation, in a round including JD.com, Alphabet, Tencent, Meituan-Dianping and insurer Allianz.
Craig Boshier joined Yamaha Motor Ventures & Laboratory Silicon Valley (YMVSV), Japan-based electronics and automotive manufacturer Yamaha’s corporate venture capital subsidiary, as an Australia-based general manager. Yamaha hired Boshier from health and wellness consultancy Valu Health, a healthcare consultancy he founded after leaving BCG Digital Ventures, a subsidiary of consulting firm Boston Consulting Group where he was managing director. Boshier told Global Corporate Venturing that YMVSV had only been present in Australia for a few weeks and its priority was to establish offices and staff to cover the country as well as nearby markets such as New Zealand and Southeast Asia.
JetBlue Technology Ventures, the corporate venturing subsidiary of US-based airline JetBlue, promoted investment associates Christina Heggie and Ajay Sharma to investment principal. Heggie joined JetBlue as an investment associate in June 2016 and led its investment in Recharge Labs, a hotel booking app developer. Before joining JetBlue, Heggie was a marketing manager for Checkmate, a mobile services platform for hotels, and he had also held consultant roles at short-term accommodation providers such as Mövenpick Hotels & Resorts, Starwood Hotels & Resorts and AirBNB. Sharma was a founding member of the JetBlue venturing team.
Jeannine Sargent, president of innovation and new ventures at Flex, a US-based logistics services company, became a senior adviser at fund manager Generation Investment Management. Sargent had spent nearly six years at Flex, being “responsible for worldwide innovation activities including innovation labs, global design and engineering, launching new product businesses, the Lab IX technology accelerator, and corporate and venture investments”.
Jill Ford, head of innovation and entrepreneurship for the US city of Detroit, joined Toyota AI Ventures, a Silicon Valley-based corporate venturing subsidiary of Japan-based Toyota, as principal. Ford had previously spent three years as the mayor of Detroit’s special adviser to identify, design and lead the implementation of initiatives to attract and grow startups and small businesses in the city. Before the Detroit role, Ford had been an angel investor based in San Francisco and a venture partner for a social impact investing fund.
University and government backing for transport companies
GCV’s sister publication Global University Venturing has reported various commitments to university spinouts in the transport sector. By the end of October 2018, GUV had reported 12 rounds raised by university spinouts, fewer than the 14 registered the previous year. The level of estimated total capital deployed in 2018 was $207m, considerably lower than the estimated $834m in 2017.
Yasa Motors, a UK-based electric motor manufacturer spun out from University of Oxford, attracted £15m ($21.4m) in a growth equity round featuring spinout-focused investment firm Parkwalk Advisors. Investment firm Universal Partners also participated in the round. Spun out in 2009, Yasa manufactures electric motors and generators. Its prime market is the automotive sector, but its systems are increasingly being used in the aerospace and marine industries.
Tier IV, a Japan-based autonomous driving technology developer, raised ¥3bn ($28.4m) from investors including University of Tokyo Edge Capital, the institution’s venture capital arm. The round also featured telecoms firm KDDI and consumer electronics producer Sony, through its Innovation Fund, as well as venture capital firm Jafco. Founded in 2015, Tier IV is developing open-source operating system Autoware to power driverless vehicles.
May Mobility, a US-based autonomous transportation developer that holds five licences from University of Michigan, announced it had raised $11.6m in total. The spinout’s backers include VC firms Tandem Capital, Trucks Venture Capital and seed fund Maven Ventures. May Mobility aims to launch self-driving shuttle buses in Detroit.
Government investments in transport-related enterprises, reported by GCV sister publication Global Government Venturing, remained relatively stable at 19 or 20 deals a year between 2015 and 2017. The estimated total capital in those rounds reached a peak at $6.9bn in 2016 but dropped to $3.05bn in 2017. By the end of October 2018, GGV had reported fewer deals (12) but considerably more investment value ($5.88bn).
Saudi Arabia’s Public Investment Fund reportedly invested at least $1bn in Lucid Motors, a US-based luxury electric vehicle developer in which conglomerate Mitsui is also an investor. Originally founded as advanced battery developer Atieva before shifting focus in 2016, Lucid is working on Lucid Air, an all-electric luxury four-door car expected to have a range of 400 miles per charge. It will also incorporate features such as voice-activated controls and updatable software, meaning the car could advance through consecutive stages of autonomy. The sovereign wealth fund made the investment through a special purpose vehicle, and the funding is intended to support a launch in 2020.
Singaporean state-owned investment firm Temasek paid $225m for a stake in India-based corporate-backed ride-hailing platform Ola through a secondary share purchase. Temasek will take a single-digit stake according to sources, buying shares from early investors. It is also considering investing money directly in Ola, which is reportedly in negotiations with investors to raise $1bn in new funding. Formerly known as Olacabs, Ola runs an on-demand ride service that spans some 110 Indian cities, with a reported 125 million registered users. The company booked a loss of about $540m during the 2017 fiscal year.