VCs spent $11.8 B on mobility start-ups in Q1 2020, report says

by | May 10, 2020 | Investing | 1 comment

VCs invested $118 billion on mob ility business across the globe throughout Q1 2020, representing a boost of 62%year-on-year (YoY).

This is according to PitchBook’s Mobility Tech Q1 2020 report which says that much of this uptick was driven by three key offers.

These included: Go-Jek’s $3 billion Series F round in March, Waymo’s $2.3 billion VC round in March, and Grab’s $886 million later-stage VC round in February.

If these 3 deals were excluded, the information shows that VC investing during Q1 reached $5.6 billion, down 23%YoY.

[Read: How to write an email pitch VCs will actually read]

At the very same time, VC exit activity remained relatively healthy with 12 VC exits in the quarter, down from 16 in Q1 2019 and 15 in Q4 2019.

The report notes that equity capital funding in the space peaked in 2018, when roughly $60 billion were deployed into mobility start-ups. In 2019, financiers spent $36 billion.

Overall, the investment has been driven by self-driving technology, the popularization of shared mobility, and the development of electronic or linked car innovations. All of this, the report includes, has resulted in a resurgence in development in the transport sector over the past decade.

As holds true with the majority of sectors, the report argues that dealmaking in Q2 2020 will also be impacted by the coronavirus pandemic.

” Startups are likely to face a more tough financing environment, with deal terms significantly favoring investors,” it notes– and that’s on top of startups losing leverage in the M&A sphere.

” We anticipate to see significant evaluation haircuts in the space and declining deal activity in the near term. We anticipate exit activity to be silenced in Q2 due to a drop in strategic acquisitions from corporates and generally unpredictable public market conditions,” the report continues.

Self-governing vehicles: A record figure in Q1

Venture capital investors put a record $3.4 billion in Q1 2020– much well above the $7937 million invested throughout the exact same period in2019

This was mostly driven by Waymo’s abovementioned raise, which pushed the business to a $30 billion valuation.

According to the report, business financial investment from automobile manufacturers drove much of the offer activity seen in the sector.

In July in 2015, Cruise Automation– a subsidiary of GM– raised $3.4 billion of advancement capital from SoftBank and General Motors.

Ford has pledged $4 billion to autonomous lorry advancement, and Volkswagen has actually committed $2.6 billion in capital into Fordowned Argo AI.

In 2018, Intel obtained Mobileye for $149 billion, marking the largest business acquisition in the area to date.

The report says that, traditionally a considerable part of VC financial investment in the space has gone toward startups concentrating on developing full-stack self-governing solutions, such as Zoox, Nuro, and Aurora.

Nevertheless, there are some great news for more specific start-ups. PitchBook discovers indications this is starting to change as investment expands into business that focus on a single element of autonomy, such as understanding or localization, or otherwise enhance the self-governing lorry area

Ridesharing: Investors invested a hefty $6.6 billion

Financiers spent $6.6 billion on ridesharing companies during Q1 2020– representing a drop of 38%YoY but an increase from the $1.4 billion raised in Q4 2019.

Top offers consisted of Go-Jek’s $3.0 billion Series F round, Grab’s $886 million later-stage VC round, and Via’s$400 million Series E round.

Overall, the report mentions these big rounds illustrate investor’s cravings for ridesharing organisations stayed strong regardless of the near-term unpredictability generated by the coronavirus pandemic.

” Longer term, we anticipate continued VC financial investment to focus mostly on global late-stage ridesharing competitors such as Grab, Didi Chuxing, and Ola,” it adds.

Carsharing: Will suffer as an outcome of coronavirus

On another note, carsharing offer worth dropped in Q1 2020 by 40.9%YOY.

The standout offer during the quarter was Turo’s $30 million later phase VC round from ADIT Ventures, Larry Fitzgerald, and Tauheed Epps.

” Investment in this segment has actually cooled relative to previous years, due to existing headwinds such strong competition from ridesharing services and challenging system economics related to fleet ownership,” states the report.

” As an outcome, American brands ReachNow, Car2go, LimePod and Maven have closed down or downsized operations in recent months, while OEMs such as BMW and Daimler have actually restructured their European MaaS offerings,” it includes.

As expected, the report says the carsharing market will likely deal with a more difficult funding environment as social distancing rules reduce the near-term attractiveness of the area.

Last mile shipment: Increased costs

Q1 2020 was a strong quarter for VC investing in last-mile shipment with investors investing$ 5.3 billion, a sum representing increases of 62.35%YoY and 128%over Q42019

Top offers consisted of include Go-Jek’s $3.0 billion Series F round and Grab’s $886 million fundraise.

The report says deal worth in the space has seen an upward pattern over the past few years as shipment services rapidly broaden in an underpenetrated market.

” Capital release in delivery continues to be controlled by late-stage deals, reflecting the relative maturity of VC backed companies running in the area. We anticipate the financing environment for shipment startups to be favorable relative to other movement sectors in the near to medium term,” it concludes.

It seems ridesharing business were the most significant winners throughout Q1 however with the coronavirus pandemic threatening existing activity it’ll be interesting to see whether VCs end up investing their money on early-stage companies, if at all.

Published May 8, 2020– 06: 30 UTC.

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