Transportation Takes Funding Spotlight

Autonomous driving, rideshare, smart cars — the transportation sector went through a major transformation in the recent years, and investors seem to have (finally) noticed.

Transportation enjoyed VC spotlight throughout 2016, according to Global Innovation Investment Report release by Crunchbase.

Overall, global VC grew 19% year over year, reaching a five-year-high of $176 billion. In the U.S., however, the amount was down 11%, to $76 billion.

“It’s been life in the fast lane for transportation investors in 2016,” the report said, with investments reaching $16 billion for transportation-related companies. That’s a whooping 75% increase compared to 2015. The hike is largely credited to several big-ticket acquisitions, most notably Didi Chuxing’s $7 billion purchase of Uber China, and General Motors’ $1 billion deal with Cruise Automation.

Venture and growth investing in transport-related companies were “fueled by momentum in the logistics, autonomous driving, automotive e-commerce, and ride-hailing sectors, as well as the prospect of big M&A exits,” according to the report.

“Automotive companies are not like any other space: scaling is extremely hard, and it takes years for any new product to develop,” Chris Thomas, founder of Fontinalis Partners, said during the Consumer Telematics Show in Las Vegas last week. “You are seeing increased investment activity in the space, but it’s not on forefront yet.” Fontinalis is among the top five investors that drove the investment growth in the sector last year, together with Sequoia Capital, Accel Partners, Expansion Venture Capital, and 500 Startups.

Among other sectors that saw increase in VC investment were artificial intelligence and virtual reality. Check out the full report here.


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