Cutting through the Noise at #UrbanMobility

Recently, I spoke at BMW iVentures’ first annual Urban Mobility Forum, where policymakers, investors, and industry speakers shared our visions of how mobile technologies will reshape our lives.

The panel discussion on cutting through noise in mobility exemplifies why I love Hemi’s focus investing in the rebels of technology. When a space gets hot, filtering through a growing pool of investment candidates creates an interesting challenge. Self-driving cars are a great example. The shared mobility market for automotives in the US and China reached $47 billion in 2016. Sharing my top predictions and advice for succeeding in this space.

Despite the hot market, I see room for three types of entrants:

1. I’m most optimistic about autonomous vehicles (AV) for commercial use cases. AV for freight delivery faces less hurdles than AV for passenger ride-sharing. 76 percent of US consumers rejected the idea of riding in driverless cars while a smaller segment, 41 percent of Americans, expressed wariness for sharing the road with AV. The lower implementation barriers for commercial AV makes it an attractive space for investment. It’s very possible that in the next three years, we will see autonomous trucks making deliveries across multiple US cities.
2. I also see potential upside for self-driving cars for consumer use. As highlighted by the above stats, the big caveat here is that manufacturers will need to shore up consumer trust, particularly in the area of AV’s safety mechanisms. For this reason, innovations that enable safety for driverless cars are compelling investments. One of our portfolio firms, PolySync, analyzes sensor data to help bridge the behavioral and functional issues associated with AV safety.
3. Finally, there is an interesting overlap for commercial-meets-consumer use cases. This would involve ride-sharing vendors partnering with retirement communities, schools, and other care centers. Large scale deployments across these demographics would provide more choices for seniors, kids, and disabled people and help them be less reliant on caretakers for mobility. One example of these services is Voyage, which already serves retirement communities in Florida and San Jose.

My top concern for the space, given its lucrative market size, is that it can encourage short term mentality. I advise founders to focus on solving real world problems. Build a sustainable revenue model to give you runway and a path to growing your market share. I tell my portfolio founders to prioritize setting the business up to survive and, as part of that strategy, encourage them to build the right partnerships from the start. Avoid the temptation of chasing the quick exit — company building is a marathon. The sales cycle in the automotive industry keeps getting longer. So entrepreneurs need to play the long game.

I’ll also mention a couple takeaways for investors new to the space. 1) Don’t pass on a startup simply because their technology seems out of your comfort zone. Before you pass, look critically at the business potential. 2) Similarly, don’t pass on a deal because the price tag is high. Consider “expensive” in context of the company’s long term value.

Less than 30 percent of the current number of vehicles would be needed if self-driving vehicles replaced today’s fleets and were more extensively shared. If we enable widespread adoption of AV, it would unclog the roadways, creating a more productive and less stressful commute.