Investments

Automakers Rev Up Venture Capital Engine With 38 Investments in 2017

Automakers that want in on ridesharing, self-driving cars or innovative car financing options aren’t always developing their own technologies or starting their own ventures. Some are taking an alternate approach to speed up development or add new business lines: They’re simply investing in another company that has already developed the next big thing.

As such, automakers are hitting the venture capital highway in droves. The number of automaker-backed investments seems to have skyrocketed overnight. In 2017, there were 38 disclosed venture and seed rounds by automakers, up from 26 in 2016 — and astronomically higher than only six in 2015. In other words, automakers are just starting to rev their investment engines.

 

Ridesharing

In the rideshare arena, InMotion, Jaguar Land Rover’s venture capital arm, invested $25 million in a $600 million funding round for Lyft in 2017. Beyond a financial investment, the deal will also provide a way for the automaker to test driverless cars.

As part of the deal, Jaguar Land Rover reportedly gave Lyft a fleet of vehicles and plans to work with the ridesharing platform to test self-driving cars. The automaker is also reportedly joining the Open Platform operated by Lyft for autonomous cars.

With an investment in Uber’s biggest competitor, Jaguar Land Rover would have “the opportunity to develop and test its mobility services, including autonomous vehicles,” InMotion Managing Director Sebastian Peck told Forbes. “Personal mobility and smart transportation is evolving, and this new collaborative venture will provide a real-world platform, helping us develop our connected and autonomous services.”

In a similar investment, Daimler Financial Services AG made an international ridesharing play with an investment in Careem. Daimler invested in a Series E venture capital funding round that raised a cool $500 million for the transportation startup, which is in 80 cities across the Middle East.

“With our investment in Careem, we are now taking the strategic step to becoming the world’s leading provider of mobility services,” Klaus Entenmann, CEO, Daimler Financial Services AG, told TechCrunch. “Careem has quickly leapt to the leadership of ridesharing within the MENA [Middle East and North Africa] regions by delivering rapid innovation and customer growth, and it is spearheading new ways to transport people from point A to point B.”

Daimler, the German car maker, was joined by Saudi-based Kingdom Holding, the venture capital firm that also backs Lyft, which led the round. DCM Ventures and Coatue Management also participated in the deal.

 

Self-Driving Taxis

Beyond rideshares, InMotion Ventures also entered the self-driving taxi market with a $3 million infusion in U.S.-based in Voyage, investing alongside Khosla Ventures, SV Angel, Initialized Capital, Amino Capital and Charles River Ventures.

The backing will support Voyage in developing a global service, as the company aims to make it so  anyone can summon an autonomous vehicle to their door and reach their destination safely. Peck is confident this will happen: “We believe they have the capability to quickly make self-driving, autonomous taxis in residential communities a reality,” Peck said in an announcement.

While Voyage’s self-driving taxis aren’t picking up passengers across the country yet, the startup has already tried out its technology in a San Jose, California, gated community. But the company is licensed to test self-driving cars on the state’s roads in 2018, and it’s refining its technology and service with feedback from users.

 

Car Financing

Aside from ridesharing, automakers have been targeting consumers who want to buy cars from them but need financing in order to do so. In 2017, Daimler invested a double-digit euro amount in AutoGravity, an Irvine, California-based startup that is designed to make it easier for shoppers to lock down financing for a vehicle purchase.

The startup offers a “first-of-its-kind comparison app for vehicle shopping and the ability to finance in 46 U.S. states.” Through the smartphone app, the automaker could further its effort to maintain growth via digital financing tied to the mobile economy.

With the Daimler deal, the app is making a nationwide push. When consumers are able to use the app, they could receive four individually designed and binding offers within minutes of a user’s application.

AutoGravity first piloted its digital financing platform in California in mid-2016 as part of a trial operation with another automaker, Mercedes-Benz, through its financial services company.

 

What’s New

What’s next for automaker-backed venture capital firms? The future is seemingly open, but perhaps mobile self-driving deliveries will spark their interest.

At the International Consumer Electronics Show (CES) in Las Vegas this year, Toyota’s headline-grabbing move was its announcement of its mobility alliance, which will develop fully autonomous electric vehicles to deliver packages, pizza and people to desired places. If Toyota has its way, your next pizza might just be delivered from a Toyota vehicle that drives itself.

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