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[Netease smart news September 28 news] When it comes to venture capital, major auto manufacturers are very interested. In the past two years, the pace of large-scale traditional car manufacturers in the field of venture capital is gradually accelerating, and the amount and scale of their transactions are constantly rising.
However, according to Crunchbase's analysis of the financing data of 20 global automakers, it is found that there is a huge difference in the scale, timing and strategic focus of each investment. Some automakers only expressed strong interest in the industry unicorn when investing, while others expressed concern about early start-up companies, and some companies have not yet invested in any start-up companies. This shows that these companies hold proactive and long-term plans in the area of ​​venture capital.
For the industry, this is not surprising. In response, Chris Stallman, partner of Fontinalis Partners, said: "The automotive industry and technology are operating in different cycles. The product cycle of automobiles is 5-7 years, and the startup companies are not the same. It is this difference to the automotive industry. The cooperation between start-ups has created a certain degree of difficulty.†Because when a car goes public, whether or not the company will exist will be uncertain. It is reported that the company is a transportation company with offices in Detroit and Boston.
In spite of this, major car manufacturers are still showing great interest in the investment of start-up companies, and this is no secret in the industry. Taking into account the rise of electric vehicles, self-driving cars, car calling services and other emerging technologies and transportation business models, the automotive industry will also face a huge shift, which is also well-known.
Below, we will begin to quantify and compare the joint investment and acquisition of individual automobile manufacturers in various fields.
| Speed ​​up transactions
Let's first look at the number of transactions. Broadly speaking, according to the financing records of the past five years, the investment of start-up companies has increased dramatically since 2016 and accelerated further in 2017.
The chart below shows the amount of venture capital and seed round financing that major automakers are involved in. These data are only some of the transaction information disclosed, so the actual investment and the number of transactions may be higher. As we all know, in order to ensure a certain degree of competitiveness, some auto manufacturers will also conduct secret transactions.
In addition, these transactions are not concentrated in a specific sub-field. For example, we have seen large-scale financing, such as automotive sales platforms, electric vehicle charging piles, peer-to-peer car sharing, battery development, and autonomous driving.
Auto suppliers are not only increasing the number of transactions but are also constantly increasing the amount of investment. As of now, only 2017 automakers have participated in at least eight rounds of financing (financing amounts up to 100 million U.S. dollars or more). And a few years ago, this number was zero. The table below shows the number of billions of dollars in financing that automakers have participated in over the past five years.
Nowadays, taxi software services are prevalent, and taxi software companies such as Via, Grab, Gett, and Careem have been favored by a large number of automakers. In addition, auto-pilot startups such as Nauto and ArgoAI have also received huge investments from automakers.
| Automobile Manufacturer M&A
Although this year is a crucial year for automakers to conduct venture capital investments, the progress of mergers and acquisitions has been slow. This is normal because car companies generally don't buy large numbers of start-up companies, although they occasionally make big deals or smaller asset purchases.
Up to now, we have not seen any large-scale M&A transactions involving car manufacturers. The most recent large-scale acquisition was GM’s acquisition of Cruise Automation’s start-up company, Cruise Automation, for US$1 billion in 2016.
In contrast, the latest deal is that Volvo acquired Luxe, a Valet Parking application developer, this month for a smaller asset sale, involving a startup that has stopped providing services. Other recent transactions, including Ford's acquisition of Chariot, a commuter transportation provider, and PSA Group's acquisition of the Autobutler, an online car repair platform, are all related to the smaller company's early deals.
However, Stallman said that whether they choose to cooperate or acquire, automakers will establish more relationships with startups. The global recession from 2008 to 2009 forced many struggling automakers to drastically cut R&D spending, and in the past few years they have been struggling to catch up. The introduction of external start-up companies is the best way to accelerate internal efforts.
| How do auto giants respond?
Although automakers have a keen interest in the investment of start-up companies, the pace of each is not exactly the same. Some automakers are particularly interested in venture capital.
Considering the number of transactions, Germany’s BMW has become the most active car manufacturer and has had more than 30 public investments since 2012, including 10 so far this year. Most of them are invested in various fields including autopilot, electric vehicles, artificial intelligence and automotive cloud technology through its corporate fund, BMW iVentures.
Although most of the transactions are A-round or B-round financing, the investment of BMW iVentures is divided into multiple phases, and the financing of many early phases is quite large. This summer, the fund participated in a $38 million Series C round of financing and provided Nauto with a $159 million Series B round of financing. It is reported that Nauto is a developer of artificial intelligence camera technology for the automotive fleet.
Daimler's performance in Germany was also very active in 2017. Up to now, there have been 8 investments, including two rounds of financing for participating in two rounds of taxi application software.
The chart below shows the amount of investment revealed by major automakers since 2016:
But so far, several car manufacturers have not participated in any investment in start-up companies. In particular, Fiat Chrysler has been reluctant to invest, although the recent cooperation with Google’s self-driving car shows that it intends to cooperate with Silicon Valley. In addition, Nissan and Mazda also have little interest in venture capital.
| The long road ahead
Looking ahead, we can easily see that the momentum of car makers' venture capital investment will continue. Recently, Toyota Research Institute, Toyota’s research and development organization, has invested US$100 million in establishing venture capital funds to better fund technology startups. There are signs that Toyota Motor will further accelerate its development in the future.
In addition, if you say which industry's investment activities follow Newton's first law, it should be the transportation industry. (From: TechCrunch Compilation: NetEase Scoop Editor: Matcha)
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