Welcome to another edition of The Friday 5 with Steve Greenfield, Founder and CEO of Automotive Ventures, an auto technology advisory firm that helps entrepreneurs raise money and maximize the value of their companies.
Let’s kick off with a look at the SPAC market, and examine why it’s cooled off considerably over the past couple of weeks.
We’ve seen billionaires, celebrities and athletes race to create special-purpose acquisition companies, or SPACs, over the past six months. These “blank check” firms, which raise money from investors and then go hunting for takeover targets, have been flagged as a sign of frothiness on Wall Street.
New scrutiny of SPACs from regulators is forcing a cooldown. Last week was the first time all year that no new SPACs hit the market.
In fact, only six new SPACs have been created so far in the second quarter. This time last quarter, 55 fresh SPACs had made their debut.
Recent announcements from regulators have hurt sentiment. In late March, the SEC issued a statement expressing concerns over disclosures and governance related to SPACs. Earlier this month, the agency indicated it would tighten some accounting standards.
The mood has been tough for shares of SPACs that have already listed. Like other risky assets, they’ve been hit by turmoil in the bond market, where yields are rising due to inflation concerns.
Even if the creation of new SPACs stays light, the hundreds already in existence will continue to have a serious impact on the market.
Goldman Sachs estimates that SPACs could drive a $900 billion dollar wave of mergers and acquisitions in the next 24 months, with $129 billion dollars of capital currently searching for target companies to take public.
And with that, let’s jump into the technology deals of this past week.
Lyft
Ride-hailing company Lyft has sold off its autonomous vehicle unit to Toyota’s Woven Planet Holdings subsidiary for $550 million dollars, the latest in a string of acquisitions spurred by the cost and lengthy timelines to commercialize autonomous vehicle technology.
Under the acquisition agreement, Lyft’s so-called Level 5 division will be folded into Woven Planet Holdings. Lyft will receive $550 million dollars in cash, with $200 million paid upfront. The remaining $350 million dollars will be made in payments over five years.
About 300 employees from Lyft Level 5 will be integrated into Woven Planet. The Level 5 team, which in early 2020 numbered more than 400 people in the U.S., Munich and London, will continue to operate out of its office in Palo Alto, California.
The transaction, which is expected to close in the third quarter of 2021, officially ends Lyft’s nearly four-year effort to develop its own self-driving system.
WarrCloud
This week we have an important deal in the fixed operation area to announce, as WarrCloud, the warranty processing automation SaaS provider focused on franchised automotive dealers, closed its $900K dollar Seed Round. The round was led by Automotive Ventures, with additional participation from Driven Capital Partners and Wise F&I.
For our regular viewers, you’ll recognize that despite the last couple of quarters of record profits, post-Covid Dealers are likely to return to an environment of increasing profit margin compression, and the need to focus efforts on finding efficiencies across all areas of their operations.
WarrCloud is a cloud computing technology platform that automates warranty processing for automotive dealers. By outsourcing back-office functions, dealers enhance profitability, streamline processes and improve focus on the customer experience.
WarrCloud’s mission is to drive increased profitability for the dealer, and they do that through tech-enabling their warranty processing.
Warranty is one of the few remaining areas of the dealership that has little to no automation, yet it is critical to protect and improve profit margins, since warranty is the fastest growing segment of a dealer’s Service line item, which is the dealer’s primary profit generator.
OEM warranty work has grown more than 38% over the last 5 years, currently generating almost $24 billion dollars in the U.S.
Prior to WarrCloud, dealers suffered manual, time-consuming claims administration practices where costs cut deeply into service profits. WarrCloud’s proprietary technology platform enables dealers to speed reimbursements, and avoid the risks associated with rapidly increasing warranty volumes in a time where the labor pool of qualified warranty administrators is disappearing.
Ottopia
Ottopia has raised $9 million from Hyundai Motor Company as well as Maven and IN Venture, the Israel-focused venture capital arm of Sumitomo Corporation. Existing investors MizMaa Ventures and Israeli firm Next Gear Ventures also participated.
Ottopia’s first product is a universal teleoperation platform that allows a human operator to monitor and control any type of vehicle from thousands of miles away. Ottopia’s software is combined with off-the-shelf hardware components like monitors and cameras to create a teleoperations center. The company’s software also includes assistive features, which provide “path” instructions to the AV without having to remotely control the vehicle.
Since launching, the small 25-person company has racked up investors and partners such as BMW Group, fixed-route AV startup May Mobility and Bestmile.
EasyMile
EasyMile, which builds shuttles for transporting both people and goods, has closed a Series B round of funding of €55 million Euros or $66 million US dollars.
The funding is being led by Searchlight Capital Partners, the investor that just earlier this week appointed former FCC chairman Ajit Pai as its newest partner, with McWin and NextStage also participating. Previous investors rail industry heavyweight Alstom, Bpifrance and auto giant Continental also participated.
EasyMile claims to be the world leader in autonomous shuttles with 60% of the global market using its vehicles. It says that its vehicles have racked up 800,000 kilometers in over 300 locations in 30 countries. But as a mark of how small and nascent that market is today, EasyMile also says that it has just 180 vehicles deployed worldwide.
Company to Watch
Every week we highlight interesting companies in the automotive technology space to keep an eye on. If you read my monthly industry intel report, I showcase a few companies each month, and we take the opportunity here on the Friday Five to share some of those companies each week with you.
Today, our company to watch is Friendemic, founded in 2010, and located in Salt Lake City, Utah.
Friendemic specializes in online reputation tools for many of the world’s largest automotive brands, retail-level dealer groups, individual dealerships, and retail businesses nationwide. Their tools have continued to evolve over the years into the launch of the Catalyst Suite, a group of online reputation products.
Friendemic offers an online reviews management service with a dedicated team monitoring and responding 365 days a year.
On the advertising side, they provide a powerful social advertising platform called Social Drive.
Friendemic has teamed up with thousands of businesses to position themselves as the leaders in online reputation and social media marketing software services.
As the importance of online reviews continues to grow, Friendemic has refocused our efforts towards reputation software tools and support services.
By building relationships and providing solutions for businesses, Friendemic has developed an understanding of their needs with online reputation and social media management.
Their tools and software platforms have continued to evolve with our customer’s needs into a well-rounded group of tech-enabled services you can trust to grow your brand and credibility.
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So that’s your weekly Friday 5, a quick wrap-up of the big deals in automotive technology over the past week.
It’s an exciting time to be in the automotive space, with a ton of deals going on. Make sure you stay tuned in each week to stay up to date on the auto industry’s technology M&A activity. I’ll keep my fingers on the pulse of deals being done, so I can share updates with you.
If you’re an early-stage automotive technology entrepreneur looking to raise money, or an entrepreneur who wants to chat about the best timing and process to sell your company to achieve the best outcome, I’d love to discuss it with you at steve@automotive.ventures.
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