Start-ups in mobility: chasing the "next big thing"

They inspire, think in new ways and accelerate innovation: start-ups are driving the mobility revolution. How can the established industry and the young guns benefit from each other? Which concepts are currently in demand among investors? And what is needed for a European Silicon Valley? The IAA Mobility Visionary Club asked experts from the industry.

Air cabs, autonomously driving electric cars and e-bikes, all bookable on demand in a single app – this is what mobility could look like in the future. However it develops exactly, one thing already seems certain: it will be fundamentally different from today. Already, the drive for greater sustainability, electrification, autonomous driving and trends such as shared mobility are setting the mobility sector in motion.

"The industry is at the beginning of a complete transformation, an revolution – and that's where enormous opportunities lie for the big players. But these companies often won't be fast enough on their own," says Mathias Entenmann at the IAA Mobility Visionary Club. He is a partner and managing director at Boston Consulting Group Digital Ventures, where he works on building start-ups – together with established companies. That's because these are often held back by their sheer size, day-to-day operations and long-established processes – change is sometimes difficult to achieve within these systems. Start-ups could act as accelerators here.

This is because the young companies often set a fast pace in innovations and thus reshape future mobility. Investors appreciate that, too: According to the Oliver Wyman Mobility Start-up Radar of 2021, mobility start-ups attracted an average of around 37 billion U.S. dollars in combined annual investment capital worldwide in five years¹.

So good times for young founders in the industry? "There's a lot of money flowing into venture capital funds, and mobility is one of them", says Julian Blessin, general partner at Speedinvest, a venture capital fund that invests across Europe and across industries. And it hasn't peaked yet, he adds: "We'll see even more investment in mobility."

So the question is, what will be the next big thing in mobility? "Certainly not a car, that’s clear", says Blessin. What is currently attractive, he says, are innovations around e-mobility and the necessary charging infrastructure, as well as autonomous driving, but also micromobility. The start-up sector is also working intensively on shared mobility and mobility as a service.

Caterina Kiehntopf, for example, General Manager Germany of the start-up Dance, believes that the trend is moving away from ownership toward leasing and subscription models for mobility. This promises "a reclaiming of urban space for people and not for cars." The company offers e-bikes and e-mopeds on a subscription basis. Nina Geiss, CMO and co-founder of ViveLaCar, a marketplace for car subscriptions that matches dealers with end customers, is also convinced: "There will be a shift toward alternative mobility solutions that will be much more flexible to cover the whole range of possibilities from micromobility to flying." Due to their high degree of flexibility, these would then also lead to greater sustainability.

With such convictions, start-ups are enriching and moving the industry worldwide. The USA is still the Eldorado for founders. Venture capital was much looser there early on than in Europe, which is probably also culturally rooted in a different attitude to entrepreneurship, in which the possibility of failure is taken into account and does not have a negative connotation. In addition, as a heterogeneous market with different languages, regulations and banking environments, Europe is likely to be a tougher proposition at times than markets such as the USA or China. But "Europe is catching up", says Blessin. Among other things, the number of mega-financing rounds with a volume of more than $100 million each has increased significantly here². Individual regions in Europe stand out as role models. There are lessons to be learned from them.

One example is Berlin, where three billion euros went to around 4,000 start-ups in 2020. In addition, Berlin is not afraid of partnerships between start-ups, established companies and public-sector enterprises, says Nina Geiss. Here, you can see how several players come together to build a larger ecosystem – and to find solutions, especially in mobility, that one company alone can't handle.

One solution on the road to Europe's Silicon Valley could therefore be more cooperation. And: "We need more start-up-friendly regulation", says Mathias Entenmann. Such a regulation could make a difference, for example by providing better incentives for investments or company shares for employees, and induce EU industry to be more courageous and cooperative.

After all, the panel concluded, no one can be a start-up motor on their own. A triangle of venture capital, the public sector and large companies is needed to drive the scene forward, says Entenmann. The latter in particular could drive development – and at the same time benefit from it themselves: "These companies have to reinvent themselves and are all on a transformation journey," says Entenmann. And traveling alone is notoriously difficult – cooperating with start-ups, investing in them or even co-founding them could increase the speed of the journey even more.

 

1/2 https://www.oliverwyman.com/our-expertise/insights/2021/sep/mobility-report-2021.html