There has been a steep decline in corporate interest in car sharing-type deals this past year according to GCV Analytics. This is perhaps of little surprise given the covid-19 pandemic has closed off or made many people uncomfortable in shared spaces.
But some interesting deals have come out of the ashes of the 10-fold drop in deal values so far this year compared to 2017’s high. Venture capital firm The Engine’s first deal out of its $230m second fund is a statement of a kind as it has led a $5m round for Routing Company, the US-based provider of a public transit management software product first being used in Scotland.
Given public transport is a $74bn business in the US alone, and car use has risen in cities while people have been unwilling to use buses and trains adding to congestion, authorities are looking at ways to harness technology.
Another way has been to target the airspace above the city. Blade, a US-based short-distance aviation company best known for helicopter rides from airports to city centres in New York City, has agreed to go public via an $850m reverse merger with a special purpose acquisition company (SPAC) affiliated with KSL Capital Partners.
Blade had been backed by aircraft maker Airbus back in March 2018, but is reaping potential longer-term trends as, according to Morgan Stanley Equity Research, urban air mobility is expected to be a $125bn market by 2025.
Airbus has been working on a zero-emission concept aircraft, Zeroe, based on hydrogen power, as well as CityAirbus, an all-electric, four-seat, multicopter vehicle that might enable Blade to move into electric vertical take-off and landing by the mid-point of the decade.
Back on the ground, however, the covid-19 crisis has taken its toll on the incumbent car companies that had been using corporate venturing to push more broadly into urban mobility. Daimler, BMW and Alliance Ventures (a $1bn CVC partnership between Renault, Nissan and Mitsubishi) have all seen upheaval in their teams.
Daimler spun off its innovation unit earlier in the month, while Greg Smithies and Christian Noske have recently left BMW iVentures and Alliance Ventures, respectively, for more independent firms (Fifth Wall and Target Global, respectively).
As one mobility-focused corporate venturer said: “There is a general problem in the industry. This is a crisis moment. Covid is an excuse for falling revenues.
“There is an underlying problem for OEMs (original equipment manufacturers) and so they are going back to their core of building cars rather than moving into mobility, which is seen as a distraction by the new CEOs.
“Venture is in the middle as they are attached to mobility business units but the people making decisions are not experienced in venture so they are prioritising cash. Those, such as Daimler and BMW, with large mobility assets could sell all or part of them while others have dipped a toe only.
“Probably only Toyota is the exception as it has the cash and the right CEO.”
And Toyota is increasing its focus on corporate venturing with its new $800m Woven fund. The timing is right to do so.
Corporate-backed deals in ride hailing, car sharing and car rental 2011 to 2020
Data as of December 9, 2020
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