Between November 2015 and October 2016, GCV Analytics tracked 56 deals involving corporate investors from the transport sector. Modest though this figure may seem, it is actually worth noting that 2016 had the largest number of disclosed deals by transport corporate venturers over the past 6 years – 50 deals in 2016 versus 44 in 2015 and 23 in 2014. The majority of the deals over the past year – November 2015 to October 2016 – took place in the US (34), and others were conducted elsewhere, such as China (6), India (6) and western Europe (8).
Most investment commitments went to emerging enterprises in transport (34 deals) and IT (11), demonstrating that potentially disruptive developments in the broad autotech sectors – such as connected, autonomous and electric vehicles – as well as the ride-hailing and car-sharing platforms, have generated most interest among corporate investors. This is also partly reflected in the total value of rounds involving corporate investors – $6.01bn in 2016 at the time of writing against $2.46bn in 2015 and only $529m in 2014.
Autonomous, connected and electric vehicles are expected not only to exert a profound impact on vehicle design and manufacturing but also to generate specific computing needs. Interviewed by GCV, Ian Simmons, vice-president of business development at global automotive supplier Magna International, said: “The connected and autonomous vehicle is going to need much greater computing power and generate a lot more data. As connectivity increases in transportation, the technology required for cybersecurity and the effective use of big data is coming from the IT industry. We are now an all-tech industry.”
Ulrich Quay, managing partner at BMW iVentures, the venturing arm of BMW, considers autonomous vehicles the most exciting area at the moment given current valuations. “There has been a tremendous amount of money being poured into autonomous vehicle enterprises. You see valuations of such companies skyrocketing. You see a lot of high valuations for early-stage companies like Zoox, for example. I get the impression that, despite their early stage, some can afford to turn down even very reputable investors, which I find truly remarkable. It is partly because original equipment manufacturers (OEMs) are willing to spend big on autonomous vehicle enterprises.”
Historical data expectedly confirms an upward trend in the number of rounds and the total capital raised by emerging transport enterprises. The number of such rounds has increased significantly over the past several years – from 57 deals in 2014 through 107 in 2015 to 94 by the end of October 2016. It is a similar story with the total capital raised in venturing rounds – $4.9bn in 2014 through $16.69bn in 2015 to $19.23bn last year. This almost five-fold increase was driven by large rounds, often surpassing the $1bn mark, raised by ride-hailing companies in both the US and China. On ride-hailing, Quay of BMW i Ventures said: “OEMs are approached by this type of company and they may want to hedge their bet or get involved in some form. We are yet to see a big acquisition in the ride-sharing space.”
The top 10 investors in emerging transport enterprises also demonstrates the surge in commitment, revealing that recent developments in the automotive and sharing economy sectors have drawn not only corporate investors from within transport, such as Didi Chuxing, General Motors and BMW, but also outsiders such as Qualcomm, Alphabet, Tencent, Alibaba and Goldman Sachs.
Deals
The top investors by number of deals were Didi Chuxing, BMW and General Motors. Those participating in the largest rounds, were led by Didi Chuxing, General Motors and Ford. The majority of top deals involving transport corporate venturers were marked by unbridled interest in ride-hailing enterprises, which raised multiple large rounds.
China-based ride-hailing service Didi Chuxing closed the largest financing round yet by a private venture capital-backed company, raising $7.3bn in debt and equity, according to the Wall Street Journal. The $4.5bn equity portion of the round included $1bn from electronics producer Apple, a reported $400m from e-commerce firm Alibaba and its Ant Financial affiliate, $600m from insurer China Life, and contributions from internet company Tencent, and telecoms group SoftBank. Didi Chuxing was formed by the merger of China’s two largest ride-ordering platforms – Didi Dache and Kuaidi Dache – in early 2015. Its operations span taxi-ordering, car-pooling, bus travel and chauffeured car services.
US-based ride-sharing app producer Uber received a $3.5bn investment from Public Investment Fund, the sovereign wealth fund of Saudi Arabia, TechCrunch reported. The cash injection was also the largest single investment in the company and boosted the total funding of Uber and its subsidiaries to over $12.5bn.
Alibaba and Ant Financial invested $1.25bn in China-based online food ordering platform Ele.me. Alibaba provided $900m of the funding while Ant Financial put up the remaining $350m. Ele.me runs an online platform for ordering food for delivery from local restaurants – an increasingly busy sector in China.
US-based ride-ordering service Lyft closed a $1bn funding round led by carmaker General Motors, which invested $500m in connection with a strategic partnership. The round, which closed at a $5.5bn post-money valuation, also featured Alibaba, Rakuten, Didi Chuxing and investment management firm Janus Capital Management. Saudi Arabia-based investment holding company Kingdom Holding reportedly committed $100m. Lyft operates the second-largest ride-hailing business in the US, after Uber, and is responsible for some 7 million rides a month across 190 cities.
Didi Chuxing invested $1bn in its US-based rival Uber, as part of a deal to acquire its Uber China subsidiary. Uber China shareholders will receive a 20% share in the merged company as part of the $35bn transaction. Uber China will continue to operate under its own brand. The transaction brought an end to one of the fiercest battles in the sharing economy realm.
SoftBank led an oversubscribed $750m series F round for Singapore-based ride-ordering platform operator Grab that included undisclosed existing investors, probably current backer Didi Chuxing. Grab operates a ride-ordering platform covering private cars, taxis, motorcycles and car-pooling services in 31 cities across six Southeast Asian countries.
US-based software development company Pivotal Software raised $653m in new funding in series C round backed by a host of corporate venturers – carmaker Ford, which provided $182m according to Reuters, software producer Microsoft, industrial conglomerate General Electric, data management firm EMC and EMC-controlled cloud and virtualisation service provider VMWare.
India-based ride-hailing service Ola raised $500m in a round featuring Didi Chuxing and SoftBank. The series F round was led by investment management firm Baillie Gifford, and included hedge fund sponsor Falcon Edge Capital and investment firms Tiger Global Management and DST Global. Ola operates an app-based ride-sharing service similar to that of Uber, with which it is competing in its home market.
Automotive manufacturer Volkswagen agreed to invest $300m in US-based ride-ordering platform Gett as part of a partnership to develop on-demand mobility services. Gett operates an app that enables users to book taxis in 60 cities across the world, including New York, London and Moscow.
Ford and internet company Baidu combined efforts to invest $150m jointly in Veldoyne Lidar, a US-based producer of light, detection and ranging (lidar) 3D mapping technology. Velodyne’s lidar systems combine laser-based sensors with the company’s software and algorithms to detect and interpret data from the environment. They are used in vehicles for mapping, localisation, object identification and collision avoidance, and will play a part in the operation of autonomous vehicles.
Quanergy Systems, another US-based developer of lidar technology, secured $90m in a series B round featuring sensor and control equipment maker Sensata, auto parts manufacturer Delphi and electronics manufacturer Samsung, which invested through its Samsung Ventures unit. Quanergy builds solid-state lidar sensors and software used to capture and process high-definition 3D mapping data in real time for object detection, tracking and classification.
China-based bicycle hire service Ofo raised $130m in a series C round featuring Didi Chuxing. The round included Citic Private Equity, a subsidiary of investment management firm Citic Capital, as well as hedge fund Coatue Management, Vision Plus Capital, Matrix Partners China, GSR Ventures, angel investor Yuri Milner and, according to Shanghai Daily, smartphone maker Xiaomi. Founded in 2014 and incubated at Peking University, Ofo is an app-focused bike-sharing platform that enables users to book bicycles.
Exits
GCV Analytics tracked only nine exits involving corporate venturing investors from November 2015 to the end of October 2016. In addition, there were 13 exits from emerging transportation enterprises. On the latest exit trends in the automotive sector, Tony Cannestra, director of corporate ventures at Denso International America, said: “We have already seen cybersecurity companies being bought before they have significant revenues and before we even have a significant installed base of connected cars that need cyberprotection. It demonstrates that there are returns to be made, which brings more venture capital to the table. There has always been a question mark about returns in the automotive area, but now we are seeing a much greater appetite for acquisitions from the industry.”
General Motors agreed to acquire Cruise Automation, a US-based driverless vehicle technology developer backed by chipmaker Qualcomm. The size of the deal was not officially confirmed but it was worth more than $1bn, according to Fortune magazine, through a combination of cash and stock. Founded in 2013, Cruise Automation is developing technology to turn any car into a driverless vehicle.
Industrial auctioneer Ritchie Bros Auctioneers agreed to acquire US-based online equipment marketplace IronPlanet for $758.5m, giving an exit to industrial machinery manufacturers Caterpillar and Volvo Construction Equipment. IronPlanet operates an online marketplace for industrial machinery and equipment with more than 1.5 million registered users across the world.
US-based car safety technology provider Lytx was set to be acquired by private equity firm GTCR for over $500m in cash, providing an exit to Volvo Group Venture Capital, the corporate venturing arm of the car manufacturer. Founded in 2008 as DriveCam, Lytx develops a range of safety products.
Impinj, a US-based radio-frequency identification technology provider backed by several corporate investors, raised $67.2m when it priced its initial public offering at $14 a share. The company issued 4.8 million shares, floating at the top of its $12 to $14 range. Founded in 2000, Impinj produces technology that uses integrated-circuit tags to identify, track and locate items such as clothing, medical supplies, auto parts, driving licences, food and luggage, and then to send the data to businesses that manage, sell or transport them.
Ford Smart Mobility, a subsidiary of the carmaker, agreed to acquire US-based shuttle service startup Chariot in a transaction that will provide an exit to sporting league Major League Baseball. Ford did not disclose the purchase price, but it was reported by Business Insider to be $65m. Founded in 2014, Chariot operates a shuttle service across various commuter routes in the San Francisco Bay area.
US-based speech interface tool developer API.ai was acquired by internet technology provider Google, providing an exit to automotive manufacturer SAIC, chipmaker Intel, communications equipment producer Motorola Solutions and electronics manufacturer Alpine Electronics. Founded in 2012 as Speaktoit, API.ai provides technology that enables developers to integrate voice command capabilities into their software and hardware products.
General Motors acquired Sidecar, a US-based ride-sharing company backed by investors including internet company Google. Sidecar closed in December and the purchase of its assets by General Motors is reported as helping its move into the driverless quasi-taxi space after its $500m investment in Lyft.
Internet company Avos exited Woomoo, a Taiwan-based developer of app prototyping tool Pop, after its acquisition by travel deal finder Priceline for an undisclosed sum. Pop, launched in 2012 by Woomoo, enables users to generate a working prototype of an app from hand-drawn sketches of its user interface. A photograph of the sketch is enough for Pop to put together a demo.
Germany-based taxi-hailing app developer MyTaxi agreed a merger with UK-based counterpart Hailo, backed by telecoms company KDDI. MyTaxi, owned by automotive company Daimler, will own 60% of the combined entity, which will take its name and be based in Germany, while Hailo will own 40%.
China-based tyre manufacturer Shandong Linglong Tyre raised approximately $390m when it floated on the Shanghai Stock Exchange, giving an exit to conglomerate Legend Holdings. Founded in 1975, Linglong Tyre manufactures a range of tyres, exporting them to about 180 countries. Legend subsidiaries Legend Capital and Hony Capital were among the investors in a $15m round for the company in 2010.
China-based last-mile delivery services provider Dada Nexus secured a $200m investment from e-commerce company JD.com and will merge with the latter’s logistics subsidiary JD Daojia. JD.com would own 47.4% of the combined entity, which will operate under the Dada Nexus brand. Founded in 2014, Dada Nexus runs a crowd-sourced delivery platform currently available in 37 cities across China.
Funds
Despite the ample interest in the transportation and autotech enterprises, funding initiatives dedicated exclusively to the sector have been few in the year to the end of October 2016.
BMW i Ventures announced it is looking to raise a €500m ($530m) fund to invest in the transport sector over the next decade. Established in 2011 with $100m in capital, BMW i Ventures has been focused on electric driving technologies and mobility services. However, its scope is now widening to include autonomous driving, artificial intelligence, virtual reality, the cloud and 5G mobile phone technology. Managing partner Ulrich Quay said: “Mobility is a huge and very attractive market, with lots of changes to see over the next 10 years. Now our investment mandate has been expanded but we will continue to invest in mobility at the same level.”
Japan-based automotive manufacturer Toyota launched a $111m fund, dubbed Mirai Creation Investment. The fund is aimed at startups developing advanced technologies for the car industry. Financial services provider Sumitomo Mitsui Banking and asset management firm Sparx also commited capital. Toyota reportedly provided $82.3m, Sumitomo Mitsui injected $27.2m, while Sparx, the fund’s general partner, invested the remaining $1.6m.
Germany-based auto parts provider ZF Friedrichshafen formed a corporate venturing subsidiary called -Zukunft Ventures. The unit will make early-stage venture capital investments and form strategic partnerships with growth-stage companies. It will invest globally but has not yet been provided with a specific level of funding.
UK-based car manufacturer Jaguar Land Rover set up InMotion, an incubator to develop and invest in products aimed at solving challenges in the transport industry. InMotion is to assist entrepreneurs in creating products that use connected devices to perform services such as unlocking car doors with a smartphone or providing on-demand delivery services.
SoftBank launched a second round of its SoftBank Innovation Program. Early-stage technology developers apply to partner SoftBank in developing prototype versions of their systems. SoftBank will not, however, invest through the initiative. The scheme covers smart homes, connected vehicles, healthcare, financial technologies, virtual, augmented and mixed reality as well as drones.
India-based logistics service provider Gati began investing in startups. The delivery and supply chain services provider is to target investments in logistics startups. Founded in 1989, Gati provides a range of delivery and supply chain services across air, road and rail to a customer base of more than 3,100 businesses.
US-based real estate holding company Gelt launched venture capital unit Gelt Venture Capital. The unit did not disclose its investment plans, but its head commented in a post: “In addition to the transportation of people, goods and services, we also view real estate, fintech, space, Crispr and computational biology as the fields of the future.”
Norway-based energy company Statoil launched corporate venturing fund Statoil Energy Ventures to invest $200m over the next four to seven years. The unit was formed to complement the firm’s New Energy Solutions division. The unit will look to invest in renewable energy and low-carbon technology, including low-carbon transportation.
People
Peter Bastien moved from the US branch of trading firm Toyota Tsusho to take up a position as principal at Siemens Venture Capital, the corporate venturing subsidiary of the industrial manufacturer. Bastien joined Toyota Tsusho America in 2002 and was its general manager of strategy and business development, overseeing external investment, including its corporate venturing deals and strategic partnerships. Prior to his stint at Toyota Tsusho, Bastien was group leader at industrial software provider PTC for five years before joining venture capital and private equity firm Patriot Venture Partners as an associate.
Salmaun Ahmad joined Korea-based industrial conglomerate Hyundai’s strategic innovation office in Silicon Valley, California. Best known for its automotive manufacturing, Hyundai also maintains interests in steel, construction, retail and finance, and its Hyundai Ventures unit opened an office in Silicon Valley in 2011. Ahmad said he would be focusing on the fintech and connected car sectors.
Jerneja Loncar, an entrepreneur-in-residence at car maker General Motors’ GM Entrepreneurs since January 2014, after nearly four years at GM Ventures, was reported to be planning her next step after running a startup.
Andreas von Richter, partner at Ecomobilité Ventures, a multi-corporate venturing firm set up by France-based companies, left to join peer Aster Capital. State-owned rail company SNCF, oil major Total, mobile phone operator Orange and car maker PSA Peugeot Citroën founded Ecomobilité Ventures in 2011. Aster Capital, formerly Schneider Electric Ventures, backs startups based in Europe, North America and Asia, and has three corporate limited partners – Alstom, Schneider Electric and Solvay – as well as the multilateral European Investment Fund. During his time at Ecomobilité Ventures, von Richter sat on the boards of EZ Wheel, Ouicar and Campanda, and was a board observer on LocoMobi.
