Millions of consumers sheltering in place to stem the spread of the novel coronavirus sent shockwaves through the global economy. Transportation-related companies were not spared in the upheaval. Mobility startups consolidated, pulled back from some markets and reduced headcount. And yet, the industry — and the VCs who invest in it — is still rolling forward.
Founders are huddled with their teams, picking over spreadsheets and go-to-market strategies in search of ways to accelerate as their runways grow ever shorter. And while the pace of investments might have slowed, venture capitalists are still seeking out innovative tech and overlooked ideas.
TechCrunch spoke with six investors about the state of mobility, which trends they’re most excited about and what they’re looking for in their next investments:
- Ernestine Fu, Alsop Louie Partners
- Stonly Baptiste & Shaun Abrahamson, Urban Us
- Shahin Farshchi, Lux Capital
- Kate Schox, Trucks VC
- Jeff Peters, Autotech Ventures
Ernestine Fu, Alsop Louie Partners
What trends are you most excited about in mobility hardware from an investing perspective?
In-car cybersecurity. Today’s vehicles are highly sophisticated smart devices, and cybersecurity is becoming an integral part of automakers’ development efforts. We’re already seeing infotainment connectivity systems and over-the-air software updates in cars being vulnerable to cyberattacks. Vehicles will serve as the nodes of vast information networks, especially as personal mobility, autonomous driving and car connectivity drive our future. In-car cybersecurity threats will remain an ongoing concern — and a rich investment opportunity.
Stonly Baptiste & Shaun Abrahamson, Urban Us
What trends are you most excited about in mobility hardware from an investing perspective?
The most interesting thing is the continued reduction in costs of electric drivetrains and autonomous stacks. These are going to have a profound impact on total costs of fleets – lower labor, fuel and maintenance costs.
So then we like to ask what happens as costs fall to move things around? How might this impact reuse or sharing of everything from clothing to electronics? If it is easy to move assets like batteries or even homes, they can be better utilized and so financing costs should fall.
We will likely see more bike adoption, and the demand will hopefully drive new innovation in bike forms for more security, safety and portability. And naturally, we are excited about Onewheel and other “owned” light EVs’ growing presence in urban mobility.
Finally, robots on sidewalks will likely have a starring role in the new touchless/public health conscious last mile delivery landscape.
What are you looking for in your next investment?
We are in the process of making our next handful of investments from an exciting pool of startups. We remain focused on working with the best teams, which means founders with a good mix of startup, technical and industry backgrounds, building innovative solutions in the sectors that encompass upgrading life and sustainability in cities such as mobility, built environment and resilience.
We do a lot of hardware investing and this has led us to build capacity for nonequity finance from project finance and working capital to revenue-based finance and leasing structures. We are not overly concerned with finding only asset-light startups. We have long believed that asset-light usually meant that someone else was taking on nonequity finance risk.
What is an overlooked opportunity in mobility hardware right now?
Responsive and nimble infrastructure is crucial for the evolving landscape of mobility. We are investors in Pi Variables, which is leading in this space with automated and coordinated safety lighting, but has potential applications for designing flexible lanes and street usage.
There is a situation we are eager to see shake out around the return to high-volume mobility once restrictions are lifted. Some may not be comfortable returning to mass transit like buses and trains, so there are opportunities to rethink the physical experience of those systems. The behavior we are noting from the first cities coming back online is a surge in bike and car demand, so there is an unprecedented opportunity to capture this new market share.
Curbside pickup and drive-through has been too easily dismissed. We don’t think cars are going anywhere and once people have made the investment in a car, pickups are more economical than deliveries. So speeding drive-through operations are likely a natural extension of warehouse and logistics automation that blurs the line with mobility.
Plus any other thoughts you’d like to share with TechCrunch readers.
Look beyond the passenger car. The interesting action is in the bike lane, on sidewalks, on industrial and private properties, in warehouses, etc.
Shahin Farshchi, Lux Capital
What trends are you most excited about in mobility hardware from an investing perspective?
I’m not excited about “trends.” I’m excited about nonobvious opportunities uncovered by people with a unique perspective into a nascent market. Perspective that’s generated by many years of trial and error, or having serendipitously stumbled upon something nobody else has seen, even if it’s in plain sight. We’re undergoing one of the biggest changes in our generation, and with that change comes massive opportunities. There will be “trends” that will receive abundant capital: autonomous cars, last-mile delivery robots, and drones to clean surfaces and serve our meals. I’m excited about the second-order opportunities that aren’t as obvious, but represent huge investment opportunities. Given my passion for cars, planes and everything that moves, having a mobility angle would certainly be a plus!
What are you looking for in your next investment?
Amazing people. Amazing people who can identify a nonobvious opportunity, build and articulate a strategy as to how a multibillion-dollar business can be built by addressing that opportunity. We expect those people to be able to raise capital and recruit even more amazing people to be held, and hold people accountable for executing on that strategy. We also like to see technology built to endow the company with a lasting, unfair competitive advantage.
Is the mobility hardware market overheated, underheated or just right?
Overheated.
What subcategories of the mobility hardware market are overheated?
EV charging, sensors for autonomous cars, dashboard cameras, vehicle-to-vehicle communications, vehicle to infrastructure communications. I think pretty much everything in mobility hardware is overheated.
Kate Schox, Trucks VC
What trends are you most excited about in mobility hardware from an investing perspective?
We’re most excited about hardware related to cleaning/sanitation/disinfection of vehicles (exterior, interior, air, etc.), structured autonomy, and new form factors of vehicles for micromobility.
What are you looking for in your next investment?
We’re always looking for exceptional early-stage teams making transportation safer, cleaner or more accessible.
Is the mobility hardware market overheated, underheated or just right?
The market for hardware built for the automotive supply chain is underheated. Building automotive-grade hardware that can keep up with the pace of advancements of software in transportation is a balance that hasn’t been achieved yet. Much of software in mobility tries to overcome limitations of existing hardware, meaning that there is much left to improve in this market. The market for shared hardware mobility is an interesting one. The hype around this market is overheated but the actual ridership, hardware design/robustness, and to some extent funding is underheated.
What subcategories of the mobility hardware market are overheated?
We don’t think any of the subcategories are truly overheated, as most of the hardware in mobility isn’t even fully productized yet and its potential hasn’t been delivered yet.
Are there still opportunities in the autonomous vehicle industry? If so, what?
We strongly believe there is a huge opportunity around structured autonomy or applying limited autonomy intelligently to constrained and structured environments. Great examples of this include agriculture, mining, rail, highway driving for logistics, etc.
Jeff Peters, Autotech Ventures
What trends are you most excited about in mobility hardware from an investing perspective?
It is hard to get excited in advance. The best companies always surprise us.
What are you looking for in your next investment?
Business model defensibility is generally stronger than technical or IP defensibility. We look forward to seeing a new wave in mobility hardware that is wrapped up in a highly defensible business model.
Is the mobility hardware market overheated, underheated or just right?
The mobility hardware startup market is overheated with the massive flow of corporate investors with a mandate to pursue these technologies. As corporate investors pull back due to financial pressures at the mothership, the market should cool severely.
What subcategories of the mobility hardware market are overheated?
All.
Are there still opportunities in the autonomous vehicle industry? If so, what?
Revenue in the autonomous “on-highway” vehicle market is a long way away and will likely be won by those with adjacent sources of “revenue” or funding (e.g., ads, personal electronic device sales). We believe the amazing AV technology and talent will spill over into proven commercial use cases “off-highway” like in industrial, agricultural, construction and mining robotics, which is where we’ve made investments.