Welcome to the fifth edition of Oliver Wyman’s Mobility Startup Radar. The Radar aims to identify promising players that will shape mobility’s future with new business models, innovation, and growth. It explicitly does not focus on the largest players with the strongest current market positioning. Instead, it emphasizes players with a promising outlook across four different mobility segments.
The current economic crisis is putting the brakes on funding for mobility across the board and threatening the transportation transition to electrification and mobility solutions that downplay car ownership. Startups in the mobility sector raised just short of $22 billion in the first half of 2022 versus the record-breaking $81 billion in growth capital invested in 2021. Investors are becoming more demanding, insisting startups prove the viability of their business models more quickly if they hope to secure funding during these uncertain times. By the end of the year, we expect venture capital funding to be roughly half of what it was in 2021.
The hype is over. Given the current economic and political turbulence, investors are thinking more realistically and put a higher focus on short-term profitabilityAndreas Nienhaus, Partner
Size of the financing rounds
In general, fewer big bets are being placed today and investors no longer trust charts that look like hockey sticks. Startups in the middle phase of financing are finding it particularly difficult to obtain significant funds. But companies based on ideas that have been tried and tested continue to be in high demand for investors.
This is a setback for the mobility turnaround, which is urgently needed from a climate protection perspective. After all, the planet doesn’t care how financial markets perform. Ideas for more climate-friendly transport need more money now than ever, not lessAndreas Nienhaus, Partner
This year’s edition of Radar also shows the benefits more mature startups have reaped through perseverance and disruptive business models. Before turning to new ideas, venture capitalists will support the development of existing portfolio companies.
Startups with a proven track record, market fit, and the potential for an initial public offering in the next few years are a relatively safe bet for venture capitalists, who want to focus on promising bets with less downside riskSteffen Rilling, Principal
As a result, investors tend to concentrate on fewer companies. One indication of this is the size of the financing rounds: While the average volume grew to $54 million in 2021, it was still an impressive $46 million in 2022, despite all the signals to slow down. One in 10 financings is now a so-called mega round, bringing in $100 million or more. The three largest companies that received funding in 2022 received almost half of the money: Wayve from London, which is one of the leaders in autonomous driving, General Motors subsidiary Cruise from California is next, and lastly, the Estonian micromobility provider Bolt, which has become known by their e-scooters but now integrates additional services on their platform. Investors are still willing to spend money if they see a proven business model.
Europe overtakes Asia for the first time
The European startups outperformed the Asian ones in terms of total financing volume with $4.6 billion raised. The relative slowdown of Asia reflects current political turmoil: venture capitalists in the United States are hesitant to invest in Chinese companies given the complexities surrounding public listings of these businesses in the US and the relentless battle against COVID-19.
Yet, while financing is solid and stable for European startups, the most significant technological leaps in mobility are still coming out of enterprises in the US and Asia. For instance, the Asian “super app” Grab, which combines several offers on one platform, can serve as an example as it collected more than $6.3 billion in 2021 alone.
Asia and the US have more mature and bigger startups in general. That’s because the big European car companies are often taking the lead in developing new mobility technology like autonomous driving where Asia and the US rely more heavily on startups.
In Europe, most financing went into customer service technology and the digitization of sales. In Asia and the US, financing focused on advanced technologies, such as autonomous driving, and making autos more environmentally friendly. These efforts require more financing. The result: Asia is still ahead on the number of mega-rounds of financing — those raising $100 million or more.
The connected vehicle segment defended its first place, garnering $7.1 billion in financing globally in the first half of the year. Connected vehicles are currently one of the hottest topics especially as the business models start to commercialize with business-to-consumer offerings in the US, China, and Europe.
One driving factor is the increasing degree of digitization connected with a higher share of electric vehicles. E-cars can supply more than twice as many data points during an operation compared with their classic internal-combustion engine counterparts. Because e-cars generate more data, more driving solutions have become possible.
About the Analysis
Oliver Wyman’s Mobility Startup Radar analyzes over 10,000 startups worldwide in the innovation sectors of mobility services, green vehicles, autonomous and connected driving as well as sales and aftersales. The displayed data was collected in September 2022 and includes all funding data for H1 2022 which was available up to that time. Full funding data is usually available 2-3 months after a given timeframe as sources are updated step-by-step.