The auto tech gold rush isn't over yet, with the autonomous vehicle ecosystem claiming 76% of the nearly $4B invested in auto tech startups this year.
Auto tech funding has raced upwards this decade, as 2016 saw new records for deals and investment dollars in the space. Investors have taken notice of the upswing in exit activity, with deep-pocketed corporates on the hunt in the space as both automakers and suppliers have been spurred to action by the opportunity at stake.
Using CB Insights data, we analyzed the surge in auto tech private markets financing through 2017, including a breakdown of how much financing has gone specifically to the autonomous driving ecosystem.
We define auto tech as companies that use software to improve safety, convenience, and efficiency in cars, specifically looking at:
- Assisted and autonomous driving
- Driver safety tools
- Connected vehicle/driving data
- Fleet telematics
- Vehicle-to-vehicle communication
- Auto cybersecurity
Only electric vehicle companies with a significant emphasis on one or more of these fields are included. We exclude companies working on the industrial aspect of the automotive space (such as manufacturing), as well as startups working on broader mobility solutions like parking, bike-sharing, and so on.
In this research brief we cover:
- Annual funding trends & quarterly funding trends
- Autonomous vehicle (AV) financing (vs other auto tech trends)
- Deal share by stage & active investors
annual funding skyrockets
Investors in the auto tech space have poured nearly $4B in disclosed equity funding across 149 deals to date, already breaking annual records by a wide margin. Dollar financing specifically is on track to more than triple from last year’s previous high of $1.5B.
VCs and strategic corporate investors have rushed to fuel companies hoping to scale in capital-hungry fields like electrification and autonomous driving, with larger rounds becoming commonplace in the field. Chinese startup NIO, which has set lofty (and pricey) ambitions to develop connected autonomous electric vehicles, has raised over $1.6B in 2017 to date.
A quarterly financing analysis shows that deals have grown to hit new highs every quarter since Q2’16, with Q3’17 setting the record at 50 deals to auto tech startups — although Q4’17 may snap this streak, with only 17 deals as of mid-November.
Last quarter also just edged out Q1’17 to hit a new record in quarterly funding, topping $1B for the second time this year. Fueling this figure were several $100M+ mega-rounds to various parts of the autonomous driving ecosystem, discussed in detail below.
autonomy drives financing boom
Unsurprisingly, autonomous vehicle (AV) development proves to be a key driver behind the rising interest and investment in auto tech.
In both 2016 and 2017 YTD, deal activity to companies working on semi-autonomous and autonomous driving technology has eclipsed all other segments of auto tech combined. Note that this includes investments in enabling technologies such as sensors, vision, 3D mapping, etc.
Indeed, 2017’s largest deals have been to companies spanning the AV ecosystem. In addition to the deal to NIO (mentioned above), large funding rounds were also raised by companies like Nauto (AV data collection, $159M Series B), LeddarTech (solid-state lidar sensors, $101M Series C), and Peloton Technology (truck platooning, $60M Series B).
A sustained flow of capital will likely be needed as players in these resource-intensive spaces hope to move closer to market. Zoox, the stealthy AV startup aiming to reinvent the concept of a vehicle itself, is said to be in talks with SoftBank for an investment of up to $1B.
Prior to the takeoff of AV technology, investments had centered around connected car and fleet telematics startups. The latter field saw several large exits last year, with Verizon acquiring both FleetMatics and Telogis.
The CB Insights Trends tool also captures the concurrent surge of AV media attention since 2016. Though coverage has grown exponentially since 2015, it has plateaued somewhat as of recent months.
Maturing investor ecosystem
Breaking down deals by stage, 2017 YTD is the first year on record where seed activity represented less than a third of deals. In absolute terms, seed-stage activity is roughly on par with last year’s seed deal count.
However, more balanced share reflects the analysis above, as auto tech matures with startups seeded in years prior now receiving mid- and later-stage investments.
Auto tech continues to draw a much deeper pool of backers, as the number of unique investors has jumped every year since 2012.