GCV Analytics defines the transport sector as encompassing ride-hailing, car-sharing and rental services, autonomous, connected and electric car technologies, public mobility and parking, vehicle hardware and maintenance as well as vehicle marketplaces and platforms, among other areas, such as air and rail transport.
GCV reported 124 rounds involving corporate investors from the transport sector for the period between November 2016 and October 2017. A significant portion of those (56) took place in the US, while 13 were hosted in China and 8 in India.
The majority of these commitments went to emerging enterprises from the same sector (81), with the remainder going into companies from the IT (10), financial (7) and industrial (7), among other sectors.
On a calendar year-on-year basis total capital raised in corporate-backed investment rounds went up to $5.63bn in 2016, more than double from the $2.32bn allocated in 2015. The deal count also soared, rising by 60% from 51 deals in 2015 to 82 in 2016. This upward trend was sustained by the end of October 2017, when GCV had reported 111 deals, worth an estimated $9.98bn by then.
As outlined later in this article, the 10 largest investments by corporate venturers from the transport sector mostly involve transport-related businesses.
The leading corporate investors from the transport sector were Germany-based automotive manufacturers BMW and Daimler, along with China-based ride-hailing platform Didi Chuxing and US automotive manufacturer General Motors (GM). Daimler, BMW, Didi Chuxing and GM were also among the top corporate investors committing to transport-specific enterprises along with telecoms firm SoftBank and internet firm Tencent.
The presence of an internet company like Tencent as important investor in this space is not accidental. Connected car tech is already a battleground for internet companies in the car market. As in connected vehicles, shopping and entertainment are expected to become an inseparable part of a driver’s experience. According to the Financial Times, at the moment, Banma – a China-based joint venture between e-commerce company Alibaba and carmaker SAIC Motors, is taking the lead in development of an in-car operating system, AliOS.
Car connectivity is now greater in China, according to a recent report by consultancy firm McKinsey, than in the western world but this may change soon. Banma announced a partnership with French-Chinese joint venture Dongfeng Peugeot-Citroën – Citroën is expected to launch its first AliOS-based internet car in 2018. This makes AliOS a significant rival to Apple’s Carplay and Alphabet’s Android Auto, car operating systems being developed in the US.
Alibaba is not alone on this area. Tencent also announced a joint venture with Guangzhou Automobile Group, which plans to build “an intelligent and connected car brand with uniqueness and competitiveness”. Internet company Baidu’s ambitions appear to extend beyond connected vehicles. In 2015, it launched its operating system Baidu CarLife, and its subsidiary Apollo, discussed further in this article, develops hardware, software and cloud solutions for autonomous vehicles. Corporates from the broader internet and e-commerce space are expected to remain significant contributors to new businesses working on car transport technologies.
Overall, corporate investment in emerging transport-focused enterprises saw a steady and sustained growth from 2015 to 2016 in terms of both deal count and total capital dollar amounts. According to GCV Analytics data, $23.76bn was invested over 142 rounds in 2016, significantly up from the $14.5bn invested over 121 deals in 2015. This upward trend appears to be sustainable, as by the time of writing, there was already $35.37bn invested in 156 deals.
Subsectors that have driven most of the growth of transport tech since 2014 have been ride-hailing, autonomous driving, connected and electric car technologies, and, less so, vehicle marketplaces and online vehicle e-commerce platforms. Asia-based companies in the ride-hailing space account for the largest dollar figures.
Innovative developments in road transport are taking place primarily in the US and East Asia and there is a growing concern that Europe may lag behind and see its traditionally strong automotive and transport sector seriously disrupted. A 2017 report – Assessment of Access to Finance Conditions for Innovative Road Transport – by the European Investment Fund and the European Commission, stated: “Due to its traditionally smaller and more risk-averse VC and capital markets, Europe is losing out on the US, even in areas where it could enjoy a natural competitive edge.” The report, however, did mention the role of Europe-based corporate venturers from the sector. “The corporate VC arms of the major European original equipment manufacturers are, however, very active investors in innovative transport technologies, which is a positive development.”
The report examined financing gaps and sub-optimal access-to-finance conditions for Europe-based companies that develop road transport technologies and services. It found that the financing gap is particularly critical for growth-stage “for urban green mobility solutions and services as well as low-carbon highly energy-efficient road vehicles”, which was estimated at between €8.9bn ($10.5bn) and €19.4bn. Thus, corporate venturers may find plenty of opportunities to finance promising entrepreneurial projects in this space and at that stage of development in Europe.
Ulrich Quay, head of BMW i Ventures, the venturing arm of Germany-based carmaker BMW, summed up the major considerations in the autonomous vehicle space: “We find it important to be able to test autonomous vehicle tech before we invest. We prefer earlier-stage investments, ideally with an existing customer base from other industry verticals.”
Deals
Transport corporates invested in a number of large rounds, raised primarily by other transport-focused businesses, mostly from the ride-hailing and autonomous vehicles space. Three of the top rounds were above the $1bn mark.
Tencent led a $4bn round for China-based online services provider Meituan-Dianping, which reportedly valued the it at $30bn. Priceline Group also participated in the round, as did the Singaporean state-owned GIC, Sequoia Capital, Canada Pension Plan Investment Board, Trustbridge Partners, Coatue Management, IDG Capital, Tiger Global Management and China-UAE Investment Cooperation Fund. Meituan-Dianping runs a local services and e-commerce platform that processes about 21 million orders a day, for items such as food, event tickets and flights, connecting 280 million customers each year with a network of some 5 million local businesses.
Singapore-based on-demand ride service Grab secured $2bn from SoftBank and its China-based counterpart Didi Chuxing as the two investors continue to expand their influence in the world’s ride-hailing sector. The funding was raised at $6bn post-money, double the valuation at which the company had last raised funding. Founded in 2012, Grab runs an app-based service spanning 65 cities in seven Southeast Asian countries that enables users to order lifts through private cars, motorcycles, taxis or carpooling, equating to an average of almost 3 million rides a day.
France-based multinational aerospace and defence corporation Airbus participated in $1.2bn round raised by US-based satellite operator OneWeb. SoftBank invested $1bn of the total capital. The round included several other corporates, all existing investors in the company: mobile chipmaker Qualcomm, beverage producer Coca-Cola, conglomerates Virgin Group and Bharti Enterprises, cable and internet service provider Totalplay, and satellite services companies Hughes Network Systems and Intelsat. Founded in 2012, OneWeb is building a network of 720 low-earth-orbit satellites to provide internet coverage across the world.
E-commerce group Alibaba co-led a $700m round series E round for China-based bicycle-sharing service Ofo. The round also included Didi Chuxing. Founded in 2014, Ofo operates a service that enables users to rent bikes using a mobile app. It has more than 100 million registered users across 150 cities, and manages roughly 2 million transactions a day. Earlier Ofo had closed $450m in series D capital from a consortium that included Didi Chuxing. The round, led by investment firm DST, valued Ofo at over $1bn.
China-based electric vehicle developer Xiaopeng Motors raised RMB2.2bn ($324m) in a series B round led by on-demand chauffeured travel platform UCar. Founded in 2014, Xiaopeng is working on and all-electric sports utility vehicle capable of being mass produced quickly, and is looking to begin commercial manufacturing.
US-based mass transit service Via obtained a strategic investment from a consortium led by Daimler, estimated to be worth about $250m. The figure includes a $50m commitment from Daimler’s Mercedes-Benz Vans subsidiary towards the creation of a Netherlands-based joint venture that will operate an own-brand and licensed service across European cities. Founded in 2012, Via operates a shuttle-based carpooling service that it provides both directly and through licensing partnerships with other public transport providers, such as rail company Deutsche Bahn-owned public transport operator Arriva.
US-based autonomous driving technology developer Nauto completed a $159m series B round, which was co-led by a subsidiary of SoftBank, and venture capital firm Greylock Partners. Carmakers BMW, GM and Toyota also invested, through their BMW i Ventures, General Motors Ventures and Toyota AI Ventures units respectively, as did Allianz Ventures, the corporate venturing arm of insurance firm Allianz. Nauto develops an artificial intelligence-powered data platform that prevents crashes and helps users drive more safely.
US-based electric bus manufacturer Proterra secured $140m from investors including GM and energy companies Exelon and Edison Energy, in a “series 5” round. GM and Exelon invested through GM Ventures and Constellation Technology Ventures respectively, but the round was led by an undisclosed participant that provided $40m. Proterra produces electric buses.
US-based electric vehicle charging network operator ChargePoint closed a series G round led by Daimler at $125m, after raising an additional $19m from investors including industrial product manufacturer Siemens. BMW i Ventures also took part in the round. ChargePoint runs a network of almost 38,000 chargers working with electric cars, buses and trucks, and serves more than 7,000 corporate and public customers.
There were other interesting deals in emerging transport-focused companies backed by corporate investors from other sectors.
SoftBank provided $5bn in a $5.5bn round that raised by Didi Chuxing, making Didi Chuxing the second most valuable private company in China, and this may presage a drive to compete with US-based rival Uber. Didi Chuxing operates an on-demand ride-ordering service with the largest market share in China, having seen off its only notable rival, Uber’s Chinese subsidiary, with a $7bn acquisition in 2016.
Tencent led a $1.2bn funding round for Indonesia-based on-demand ride and delivery service provider Go-Jek. The deal, Tencent’s first venture capital investment in Indonesia, valued Go-Jek at $3bn post-money. Go-Jek initially focused on a ride-hailing service centred on motorcycle taxis called ojeks, but has since expanded to four-wheel vehicles and now oversees a network of 200,000 drivers across 25 Indonesian cities.
India-based on-demand ride provider Ola raised $1.1bn in a funding round led by Tencent. SoftBank also participated in the round, as did undisclosed US-based investors. Ola is in talks with additional parties in a bid to add another $1bn. Founded in 2011 as Olacabs, Ola has built an app-based ride-hailing service ranging from luxury cars and taxis to auto rickshaws and shuttle buses, and the company operates in 110 Indian cities.
US-based ride-hailing platform Lyft raised $1bn in a funding round led by CapitalG, the growth-stage investment arm of internet and technology conglomerate Alphabet. Lyft did not name other investors in the round, which valued it at $11bn. The deal came shortly after Lyft entered talks with investment banks about a possible initial public offering in 2018. Lyft operates an on-demand ride-hailing platform that is available in 300 cities across the US. It has completed more than 500 million rides.
Lyft had closed a $600m series G round earlier, featuring e-commerce firm Rakuten, that valued it at $7.5bn. The round included investment firm KKR’s Next Generation Technology Fund, investment firms Janus Capital Group and Baillie Gifford, investment and research management firm AllianceBernstein and pension fund PSP Investments.
Tencent led a $600m round for China-based bicycle-rental platform Mobike that included financial services firm Bocom International and ICBC International. Mobike operates an app-based bike-rental service that was launched in Shanghai in April 2016 and has expanded rapidly since. The company launched in about 100 cities last year, including Singapore and the UK.
Investors including Tencent and automotive e-commerce firm Bitauto agreed to invest a total of up to RMB4bn in China-based online vehicle trading platform Yixin Group. The corporates were joined by various institutional investors. Yixin runs an online marketplace for new and used vehicles serving carmakers, vehicle dealers and automotive service providers as well as financing and insurance partners.
Uxin, a China-based used-vehicle marketplace, previously backed by internet company Baidu, raised $500m in a round featuring a fund owned by outdoor advertising specialist Focus Media, among a host of other investors. Uxin operates online platform Youxinpai, where consumers buy and sell used vehicles, as well as business-to-business vehicle marketplace Uxin Pai and a financing service for automotive purchases.
Exits
Corporate venturers from the transport sector completed six exits over the past year – four acquisitions and two mergers. On a calendar year-to-year basis, GCV Analytics tracked 11 exits in 2016, a sharp and significant increase from the four transactions recorded in 2015. The estimated exited capital also surged to $1.39bn in 2016, up from $154m in 2015.
US-based ride-hailing service Uber agreed to invest $225m in a company that will merge its operations in Russia and some neighbouring countries with that of Russia-based internet company Yandex. The entity will consist of Uber’s on-demand ride and food delivery assets in 21 cities across Russia, Azerbaijan, Belarus and Kazakhstan and Yandex’s analogous subsidiary, Yandex Taxi, which was founded in 2011 and which is also present in six countries including Armenia and Georgia. Uber will own a 36.6% stake in the company, valued at $3.73bn, and will have three of its seven board seats.
Chemical supplier Nippon Shokubai agreed to acquire US-based chemical producer Sirrus for an undisclosed sum, allowing General Motors and diversified conglomerate Mitsui to exit. Founded in 2009 as Bioformix, Sirrus makes monomers and derivatives that enhance performance and cut energy consumption in advanced manufacturing and assembly processes.
Germany-based ride-sharing service provider CleverShuttle was acquired by media group Madsack Mediengruppe, providing an exit to Daimler and Deutsche Bahn. Madsack acquired the majority stake through its publishing subsidiary Leipziger Verlags und Druckereigesellschaft. Founded in 2014, CleverShuttle enables users to hail a vehicle through an app and join a car with other passengers travelling a similar route. The company focuses on the environmental advantages of ride-sharing, operating electric, hydrogen and hybrid vehicles.
Daimler acquired Germany-based ride-sharing platform Flinc for an undisclosed sum, giving an exit to investors including Deutsche Bahn and General Motors. Founded in 2010, Flinc operates a peer-to-peer ride-sharing platform with more than 500,000 registered users. The offering is available as an app and website, and is integrated into other services, such as company apps that enable colleagues to carpool.
Hellobike, a China-based bicycle sharing service backed by electric vehicle producer WM Motor, agreed to merge with its Shanghai-listed peer Youon Bike. Financial terms of the merger were not disclosed. Hellobike and Youon will collaborate with Ant Financial, the financial services affiliate of Alibaba that holds shares in Youon, in the areas of bike rental, electric bicycle sharing and car sharing.
Beepi, a US-based online vehicle marketplace that had raised about $150m in funding from investors including carmaker SAIC Motor, wound down its business. Founded in 2013, Beepi operated an online peer-to-peer marketplace for used cars. It had grown quickly and in September 2015 closed a $70m round led by China-based SAIC that valued it at $500m.
We also reported exits from emerging transport enterprises that involved corporate investors from other sectors as well, notably from the IT, electronics and industrial sectors. One was a record-breaking acquisition.
The largest acquisition so far recorded of a company previously backed by corporate investors was completed by semiconductor manufacturer Intel, which acquired Israel and US-based developer of vision driver assistance systems Mobileye for $15.3bn by purchasing 84% of its outstanding ordinary shares. Mobileye was previously backed by financial firms Goldman Sachs and Morgan Stanley in the 2000s as well as by car-rental services Enterprise Rent-a-Car and financial firm Fidelity in 2013 before it floated on the New York Stock Exchange in 2014. Founded in 1999, Mobileye develops a collision avoidance system with computer vision and machine learning, data analysis, localisation and mapping for advanced driver assistance systems and autonomous driving.
Nutonomy, a US-based self-driving technology producer backed by South Korea-based electronics producer Samsung, agreed to a $450m acquisition by automotive components manufacturer Delphi Automotive. Delphi agreed to pay $400m upfront and, with earn-outs, the purchase price totalled about $450m. Founded in 2013, Nutonomy is working on software facilitating large fleets of autonomous ride-hailing vehicles by enhancing image perception, mapping and localisation, motion planning and decision-making.
Engine manufacturer Deutz purchased Germany-based electric drive developer Torqeedo for an undisclosed sum, providing exits to industrial product manufacturer Robert Bosch and car parts supplier Brose. Deutz plans to incorporate Torqeedo’s R&D expertise into its electric and hybrid motoring division. Founded in 2005, Torqeedo manufactures electric and hybrid-powered propulsion motors for watercraft.
Mass media group Comcast exited US-based connected car technology developer Automatic Labs in an acquisition by online radio company SiriusXM, which was reported to be above $100m in size. Automatic has created a connected car adapter that can connect to a user’s smartphone, giving them in-car access to apps providing services such as fuel monitoring, identification of engine trouble and the capability to alert emergency response about accident sites.
China-based bicycle-sharing company Youon Bike raised $87m in an IPO in Shanghai that provided an exit to Ant Financial. The company’s shares were priced at RMB26.85, and rose as high as RMB38.66 on the first day of trading. Youon is the first China-based on-demand bicycle service provider to go public. Founded in 2010, it began life as an operator of government-funded bicycle rentals in small cities and towns across China. The company expanded into dockless bike-sharing in 2016.
France-headquartered car parts provider Valeo acquired a 50% stake in CloudMade, a US-based developer of a machine-learning mapping platform for connected cars. CloudMade was one of six companies in which Intel Capital had invested an aggregate of $26m by 2011. Founded in 2007, CloudMade develops machine learning and content aggregation from multiple sources for connected cars.
Carmaker Volvo paid an undisclosed sum to acquire the assets of Luxe, a US-based on-demand valet parking service backed by car rental firm Hertz and Alphabet. Founded in 2014, Luxe operated an app-based service for organising valet parking as well as a range of other services including washing, refuelling and oil changes.
Funds
Between November 2016 and October 2017, corporate venturers and corporate-backed VC firms investing in the transport sector secured over $5.58bn in capital through 30 funding initiatives, which included nine corporate-backed VC funds, six new venturing units, six accelerators and three incubators.
On a calendar year-to-year basis, funding initiatives registered a significant increase in initiative count – from five in 2015 to 15 in 2016, while total capital surged from $239m to $1.57bn over the same period. Both the number of initiatives and total fund raised are increasing rapidly – by the end of October 2017, Global Corporate Venturing had reported 27 initiatives worth an estimated $5.32bn.
Baidu announced RMB10bn investment vehicle Apollo Fund, aimed at autonomous driving. The fund is set to back 100 self-driving car projects, seeking opportunities across the globe in the areas of software, hardware, vertical services and data providers. The fund draws its name from Baidu’s open-source autonomous driving platform Apollo, which has attracted 70 industry partners so far, including car manufacturers such as Hyundai. Portfolio startups will gain access to the Apollo platform and the ecosystem of partners.
China-based manufacturing services provider Foxconn partnered venture capital group IDG Capital, investment subsidiary of media and research company International Data Group, to form a RMB10bn investment fund focusing on transport technology. Foxconn and IDG will supply 10% of the capital as well as experts to run the fund. They have been in talks with state-backed funds, financial institutions and private investors concerning further backing. The unnamed fund will target a range of technologies including autonomous driving software and advanced batteries, and will invest in companies based in China, Japan and the US.
UCar formed a RMB10bn strategic investment fund, which, according to chairman and CEO Lu Zhengyao, will cover the entire automotive value chain. Although its competitors include ride-hailing company Didi Chuxing, UCar operates through a different model, largely using an in-house fleet of cars, and an investment in Xiaopeng could herald a new source for its vehicles.
A group of executives and entrepreneurs set up a clean energy investment fund – Breakthrough Energy Ventures (BEV) – which will collaborate with corporate partners. Bill Gates, co-founder of software provider Microsoft, is chairman of the fund and one of 20 individuals who have agreed to provide more than $1bn in capital to make early and growth-stage investments. The consortium includes Jack Ma, chairman of Alibaba; Mukesh Ambani, chairman of conglomerate Reliance Industries; Hasso Plattner, co-founder of software producer SAP; Jeff Bezos, founder of e-commerce firm Amazon; Richard Branson, founder of Virgin; and Masayoshi Son, CEO of telecoms group SoftBank. BEV will focus on the commercialisation of research that helps reduce greenhouse emissions in technologies such as electricity generation and storage, transportation, industrial processes and agriculture.
Samsung launched the $300m Samsung Automotive Innovation Fund. The fund will make strategic investments in companies developing connected and autonomous vehicle products in areas such as smart sensors, machine vision, artificial intelligence, high-performance computing, connectivity, automotive safety, security and privacy technology. The unit will bolster Samsung’s own technology efforts in the sector. It has received licences to test its autonomous driving software and hardware on the road in California and Korea.
Brian Krzanich, chief executive of Intel, announced that the company’s corporate venturing unit, Intel Capital, intended to invest $250m in autonomous driving technology over the next two years. Those investments will help fuel improvements in automotive connectivity, communication, context awareness, deep learning, security and safety, by using internet-of-things technology and data to improve safety, mobility and efficiency. Intel Capital first committed $100m to its Connected Car Fund in 2012.
Ping An Insurance, a China-based insurer, set up a RMB1bn corporate venturing fund to support financial services technologies. The Ping An Innovation Centre is the first fund established by a major financial institution in China. Ping An is looking to boost its core businesses by investing more in innovative technologies from the internet, mobile and data as well as customer-distribution channels and healthcare and automotive-related services.
Singapore-based integrated engineering and industrial product manufacturer ST Engineering launched corporate venturing subsidiary ST Engineering Ventures armed with $150m. The unit will seek opportunities in sectors relevant to ST’s long-term growth, such as robotics, autonomous technology, data analytics and cybersecurity, and will initially operate out of offices in Singapore, Israel and the US. The initiative is open both to internal engineers and external teams, based either locally or abroad.
China-based venture capital firm YI Capital closed a first fund at RMB800m after securing home appliance manufacturer Joyoung as a limited partner. Joyoung was joined by national industrial guidance fund Zhongjin Qiyuan and Citic Industrial Fund of Funds, part of alternative investment management firm Citic, as well as additional publicly-listed companies and state-owned guidance funds. In particular, the firm is looking to back industrial internet startups that will participate in the accommodation, transport and financial services industries as well as those providing other traditionally offline-based services.
People
Airbus Group shook up its corporate venturing leadership and appointed François Auque and Thomas d’Halluin to lead the European and US venture investment activities respectively. Their appointment followed the departure of Tim Dombrowski, CEO of Airbus Ventures, and his partner, Heikki Mäkijärvi. Auque was previously CEO of Airbus Group’s defence and space division in France and executive vice-president of space systems. D’Halluin was formerly chief operating officer of Airbus Ventures having earlier been chief financial officer.
Several additional hires were made by Airbus in North America and Europe, including Maryanna Saenko, based in Silicon Valley, who had previously worked at Lux Research’s autonomous systems group; Anabelle Oliveira, based in Paris, France, who had worked with Auque at Airbus defence and space; and Matthieu Repellin, also based in Paris, who spent 13 years in the semiconductor industry at STMicroelectronics before joining Airbus in 2013 and latterly working at its A3 innovation centre. Dylan Gale, an associate at Airbus Ventures, joined cable group Comast’s corporate venturing team to cover “augmented and virtual reality, the internet of things and frontier technologies”, as he stated on his LinkedIn profile; Later, Saenko left Airbus Ventures to take a senior associate role at VC firm DFJ.
Sherry House, vice-president for corporate development covering mergers and acquisitions and corporate venture capital at car parts maker Visteon, joined Alphabet’s self-driving car project Waymo. She is now director and head of corporate finance at Waymo covering corporate development. Over her career, encompassing running the CVC services business and setting up the Silicon Valley investment banking office and at consultancy firm Deloitte, House has executed 65 transactions.
