By Jeff Peters, PhD, Principal, Autotech Ventures
At Autotech Ventures, we focus exclusively on investing in transportation technology startups. This includes everything from the design and manufacture of the vehicle to all the mobility services around the vehicle until its ultimate recycle. Connected cars is one of these many themes, but certainly an important and timely one.
Thus far, we have focused on use cases for connected vehicles that are attainable today. For example, we invested in Lyft, which connects users and drivers to match rides—enabling the ridesharing market. We also invested in SpotHero, which allows drivers to search and book available parking spaces in advance. We’ve also invested in a company that is utilizing vehicular data to create transformational products in the insurance market. Volta, which provides free electric vehicle charging, can also benefit from vehicle-to-infrastructure connectivity. There are likely a lot of companies that will come to us with use cases we can’t imagine ourselves, and we are prepared to be surprised by innovative entrepreneurs.
We’ve also spent a lot of time thinking beyond these high-value use cases of today and how vehicle data can be made more accessible to realize its full potential for the future. Insurance, fleet management, repair, real estate, mapping, advertising, and other companies have all demonstrated interest in working with startups to acquire vehicle data from the OBD port or from mobile devices. They have also expressed interest in greater access to vehicle data behind the OBD firewall. Currently, most telematics data are just subsets of the total data collected. In the end, we believe greater data access requires buy-in from automakers who have access to the really interesting and exclusive data.
Along with making data pervasive, we must think about making data manageable and secure. The new use cases for vehicular data will only be unleashed if the benefits far exceed the risks. As such, we’ve spent a lot of time researching automotive cybersecurity.
Connectivity of vehicles will only increase with time—especially with 5G on the horizon
The future vehicle architecture is still in flux. Will it remain highly distributed or become more centralized? This will have large ramifications on data flows and cybersecurity risks. We’ve remained on the sidelines so far but have seen some compelling technologies emerge.
How do you differentiate between the opportunities that you see?
Like any venture capital firm, Autotech Ventures pursues extraordinary financial returns. Therefore, we look at factors like: market size, product-market fit, founder-market fit, quality of team, competitive landscape, etc. We invest in companies at all stages of maturity. We’ve invested the first institutional money into startups and participated in Series C rounds and beyond. Investing in different stages of maturity in the startup lifecycle carries different risks and requires different types of focus on the attributes of each deal.
Because of our focus on the transportation sector, our relationships with incumbent players, and our robust deal flow from transport startups, we can really go deep into product-market fit, competitive landscape, and how we might be able to really deliver value to the startup.
How do you work with the companies in which you invest? Tell us about your investment style.
Supporting our portfolio in part through our partnerships is a key differentiator for Autotech Ventures compared to generalist venture capital firms. There is a lot of recent interest in mobility following Lyft, Uber, autonomous vehicles, e-scooters, etc. Startups can probably gain an audience from almost any investor these days. However, it’s important to note that there is an incumbent transportation ecosystem, and unlike many generalist investors we’ve been in the transportation business for a while. It’s the only thing we focus on.
We have many corporate partners in our fund, including automakers, suppliers, semiconductor companies, energy giants, dealership groups, repair shop chains, and others.
We also are deeply entrenched in the entire transportation ecosystem—beyond our partners. We’ve also assembled a high-caliber team of advisors including former automotive executives, industry analysts, and former U.S. Secretary of Transportation, Anthony Foxx, who provides a lot of great perspective on public policy for our portfolio companies.
As a result, we are in a unique position to help our portfolio startups navigate the transportation ecosystem and execute their visions by making introductions to the right people at companies that will help grow their businesses.
How do you work with clients post investment? How do you think your current portfolio of companies has benefited most from your guidance?
Once we make an investment we work hard to make connections, so our portfolio companies can scale their business quickly in a strategic way. This includes customer introductions, strategic planning discussions, recruiting, marketing support, and anything else we can do to help grow the portfolio company.
We’ve made dozens of connections, many of which turned into real revenue for eachportfolio. We’ve also driven certain business development activities for companies that are tackling multiple markets, so they can devote their scarce resources to other market opportunities.
How does Autotech Ventures’ focus and style apply to connected cars?
Our focus on scaling through partnerships will be very important for connected cars. Not all transportation startups require partnerships to scale. However, in the connected car space there are many actors that require coordination, such as telecommunications companies, automakers, automotive suppliers, as well as both local and federal regulators.
Connectivity of vehicles will only increase with time—especially with 5G on the horizon. In fact, our portfolio company, Metawave, develops both beam-forming antennae products for automotive radar and 5G applications.
There will be enabling technologies, like data platforms, infrastructure, cybersecurity, as well as emerging use cases. At Autotech Ventures, we keep our ears to the ground to track these opportunities. When we find a great team with a great idea, we are prepared to invest and to work closely with them to help them become the next leader among mobility companies.