Investment activity up over 50% vs last year with more than 87% at seed, angel and Series A stages. Prominent venture firms including Accel, Atomico, General Catalyst, Union Square Ventures and Redpoint have all already made bets on this emerging space.
Mobile and online software focused on helping you get from here to there or Consumer Transportation Tech is an increasingly hot area for investment. Although the funding to transportation tech in the last year (just over $100 million) is relatively small compared to other sectors (big data or ed tech for example), this potentially very large market has already seen many of the top VCs jump into the fray.
e-Hailing app Uber has Benchmark Capital, First Round Capital, Goldman Sachs and others betting on it while it’s cross-pond rival and competitor Hailo has Accel Partners, Atomico and Union Square Ventures. Of course, consumer transportation tech is not limited to e-Hailing apps. Innovations in ride sharing from the likes of Lyft (aka Zimride) with backing from Mayfield Fund, Floodgate and K9 ventures and Getaround whose investors include Redpoint and General Catalyst have also garnered a good amount of interest and deal activity.
Of course, big markets are not easy to take (see Fred Wilson’s post on Monopolies and Startups) and disruption is not always easy to turn into a real business as evidenced by ride-sharing pioneer ZipCar which was acquired by Avis earlier this year. Zipcar which had been at it for some time only flirted with profitability, had a relatively weak cash position at the time of acquisition and was well under its IPO highs when acquired.
But before winners and losers are named in transportation tech, you must have some players competing for the market and given the uptick in financing activity, there are definitely an increasing number of companies vying for the space. The last year has seen 32 financings (a 52% increase yoy) and $108 million of funding (a 7.5% increase in funding yoy). The deal trend is gradually increasing as evidenced below.
Note: Consumer Transportation Tech does not include mobile and online software in the areas of supply chain, logistics, etc where there is also significant innovation going on. Our focus in this analysis is on the consumer side of the equation.
Consumer Transportation Tech in this analysis includes the following:
- car sharing
- ride sharing
- next-gen taxi services / mobile taxi / e-hailing
- other novel tech-based transportation cos (i.e. StearClear—a designated driver service that uses GPS via smart phones to connect customers with professional driving teams to get them and their cars safely home)
The immaturity of the Consumer Transporation Tech market is best seen in the graphic below which highlights that 87% of the deals in the space have been at the seed/angel and Series A stages which means early stage companies. We are in land grab mode right now as nobody “owns” the space. This means more entrants, a number of companies that won’t execute well enough to get follow-on funding and a handful who will go on to raise big later stage rounds in the next couple of years.