The mobility industry is rapidly shifting to readjust for an electric and autonomous future.
Automotive companies are increasingly looking outside the manufacturing sector to fuel growth, and companies that used to bank on selling vehicles are now building mobility apps, scooters, and subscription services. Detroit is turning to to Silicon Valley for fresh ideas while Silicon Valley is studying Detroit for proven methods.
We surveyed top VCs in the mobility sector to see where they’re putting their money, and one thing quickly became apparent — investors are funding startups that bring connectivity to mobility. From automobile components to social apps, connectivity is critical to investors and the industry alike.
Reilly Brennan, general partner, Trucks VC
Michael Granoff, managing partner, Maniv Mobility
Jim Adler, founding managing director, Toyota AI Ventures
Dr. Ulrich Quay, managing partner, BMW i Ventures
Answers were edited for clarity.Reilly Brennan, general partner, Trucks VC
Where are you investing in the automotive space?
We invest in startups that make transportation safer, cleaner, and more accessible. Anything that moves goods or people is interesting to us. We are first interested in exceptional founders, then exceptional ideas. For example, we just invested in a new type of car wash that doesn’t use any soap or chemicals; although it was never our intent to seek out that idea, we really believed in the founders’ vision for making it happen.
Which areas in automotive offer the most opportunity for startups?
There are many big opportunities across transportation — such is the case when you’re operating in markets measured in trillions. Right now, I am more convinced than ever that there is a 10-figure opportunity for a new navigation app — it’s one of the few/only transportation-related apps on everyone’s home screen. Still, the leaders are mostly incumbents (Apple Maps, Google Maps), where the products are good but haven’t made fundamental leaps in years or an app like Waze, which is high utility but low user experience. Other than YouTube, Waze is probably Google’s only social network, although I doubt they think of it like that. For how important navigation is and will be, we’ve been surprised more founders don’t create more there because the value is high. If you are working on something in this space, please email me! firstname.lastname@example.org
What makes a startup attractive for investment from OEMs?
Most OEMs are interested in companies that support their future product vision. Every once in a while, you will find an OEM with an alternative strategy that does not invest in supporting their products, but these are quite rare. As a result, startups who are actively selling in the auto supply chain are the best positioned for auto investment. Remember that many OEMs passed on investing in Uber in the early days.