Record investment of OEMs in Startups
The car of the future will be connected, shared, and self-driving. None of these are the core businesses of OEMs, but they are of plenty of startups, which are now getting more funding of OEMs than ever.
Crunchbase collected data on the investments of the 20 largest global carmakers in the startup ecosystem. They concluded that the venture activity of the big OEMs is trending up in 2018, and that carmakers are getting more involved with startups than ever.
For instance, so far in 2018, big OEMs participated in over 50 known venture and seed financings globally, which is already more than the total for 2017 and the highest number since Crunchbase started tracking. The data show how funding activity of OEMs in the startup space increased remarkably as from 2016, when investments in car tech startups exceeded the milestone of $1billion, with GM’s acquisition of Lyft, and Toyota’s investment in Uber among other big investments. And so far, 2018 is on its way to become the seventh consecutive year of rising deal counts.
Changing market, changing funding
Not coincidentally most of the funding of OEMs goes to the emerging technologies and business models, such as self-driving, electrified and shared mobility. They also invest heavily in future emerging technologies, such as 3D metal printing and solid-state batteries. The changing market apparently requires a changing funding pattern.
Carmakers even turn out to be the lead or even sole backer in about a third of all funding rounds in which they participated; including some of the largest transport-related fundings. Moreover, the three biggest rounds went to ride hailing companies. Toyota invested respectively $1 billion and $500 million in Uber and Grab, Daimler invested $175 million in Taxify, followed by Volkswagen who invested $80 million in Gett. Additionally, Crunchbase points out that Toyota joined SoftBank in a $300 million round for Getaround.
Further than funding
Often, carmakers go further than merely funding startups and acquiring them outright; as has done BMW with ParkMobile, or Daimler with Cinteo and Flinc, while Ford bought Autonomic and Transloc, to name but a few of the startup acquisitions by automakers last year. Most of the acquired startups are early-stage companies; and this year's are merely focused on business-model innovations, rather than deep tech solutions.
Some OEMs have their particular funds looking for new mobility technology, such as BMW iVentures, or Ford’s Ford Smart Mobility division while others have set up own startup programmes, such as InMotion of Jaguar Land Rover, or the Garage of BMW.
Investments of OEMs in startups are definitely growing, however so are the valuations of the startups themselves, making investing in them a pricy option. Being left out might not be an option, either.