The car industry is putting the brakes on startup funding after a frantic year of investment. According to Crunchbase data, only 13 fundraising rounds have been led by the top global automakers in the first two-thirds of this year. They led to at least 32 known financings in 2021, which is a significant decrease.
The market decline hurt dealmaking at the late stage.
What is happening? First off, this isn’t a phenomenon unique to the car sector. Most industries’ funding is now receiving less money than in 2021, when it reached record levels. Unsurprisingly, the pre-IPO and late stages have seen the most significant drops in funding. No one is getting bigger to access public markets because the IPO window has closed and SPAC agreements are no longer in vogue.
Compared to the previous year, this is a stark contrast. If you recall, the electric vehicle manufacturer Rivian, which was backed by venture capitalists, went public in November and momentarily achieved a valuation of $127 billion, which was higher than the sum of Ford and GM. The self-driving truck company Embark and EV battery manufacturer QuantumScape, both of which went public in late 2020, were among the other significant offerings made through SPAC agreements. All of them are currently trading at a significant discount to their previous highs, bringing down overall valuations with them. However, investment at the early and mid stages is more resilient. Porsche’s $400 million Series C financing for Group14 Technologies, a provider of silicon-carbon technology for lithium-silicon batteries with headquarters in Woodinville, Washington, is one of the largest automaker-led rounds this year.
Most startup transactions are being done by these automakers.
While some large manufacturers engage in few, if any, deals, others are rather active startup investors. We analyzed Crunchbase data to find rounds backed by auto firms or their investment arms to gauge where they stood.
The conclusion? By a number of rounds, Toyota came in the first place, having invested in at least 16 startups this year, largely through its Toyota Ventures division. The highest round in which it took part was a $126 million Series B for Revel, a shared electric car service. This was followed by a $111 million investment, which also included BMW, in the autonomous driving startup May Mobility.
Volkswagen came next, which frequently makes the biggest investments in start-ups through its Porsche Ventures division. Along with the aforementioned Group14 Technologies, sizable investments include a $450 million round for Electrify America, an EV-charging network.
With 12 startup investments made so far this year through its BMW I Ventures division, BMW was also extremely active. Meanwhile, General Motors and Hyundai participated in three and four private company financings, respectively. Additionally, GM increased its investment in Cruise, its self-driving car division. Some people were more inactive. Each of Ford, Daimler, Honda, Stellantis, and Tesla had two to no deals.
