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Driving New Connected Car Investments

Paul Asel, Partner, NGP Capital

08.05.2014

Our heritage in mobile

In 2005 when we launched NGP, we focused on mobile investments as we believed this was an emerging area of opportunity for venture investing that was well aligned with our expertise and Nokia strategic interests. We sought to establish a differentiated market position by focusing intensely on a single sector applying a global perspective and deep industry experience. At the time, mobile was considered a niche area and few investors were focused on it, so we were credible claiming to be global mobile investment experts. Over the years, we have delivered on this claim by backing great entrepreneurs and working hard to support the companies in which we have invested.

From mobile to mobility

In the past ten years, the mobile industry has transformed greatly. No longer a niche industry, mobile has become ubiquitous spanning across most of the tech industry. All data must now be mobile, seamlessly available across devices in real time. A spate of mobile innovation has attracted a new generation of entrepreneurs and much venture funding. While one could earlier speak of potentially having a mobile strategy, now all promising companies must have a mobile strategy. The concept of mobile itself has expanded extending from phones to tablets, wearables, automobiles, cloud computing, the digital home and beyond. Our sector is not just about mobile anymore but more broadly about mobility.

Connected Vehicles – a new era of smarter mobility

Why establish a fund focused on Connected Cars in an ever expanding era of mobility? First, the Connected Car Fund extends our investment purview. NGP will continue to invest across the mobility sector from NGP III, our $250M fund launched last year. The $100M Connected Car Fund will be managed as a distinct fund recognizing that the automotive sector is a large industry on the tip of transformation requiring focused resources and expertise much like our experience in the mobile phone industry a decade ago. The Connected Car Fund will invest in disruptive technologies and companies across the auto ecosystem, location and transportation.

Second, that the auto industry is large is readily apparent. In the US, the auto sector accounts for 20% of U.S. retail and manufacturing with over 250 million cars and trucks on the road. Yet the car is a virtual white space: the average American spends 52 minutes per day in a car, most of it alone with little more than a radio at hand. No wonder texting and driving is such a problem.

The auto industry as a vehicle for change requires further explanation. We have already seen much change in the past decade with hybrid cars, satellite infotainment systems, digital dashboards and in-car navigation devices. Tesla is showing how the car can be re-engineered around new green technologies. Waze and Uber illustrate how mobile first technologies can reimagine our driving experience. Yet this is just the beginning as new advances provide safer, cleaner, more connected, intelligent and affordable means of transportation. We believe that vehicles are becoming a new platform for technology adoption akin to our experience in the phone industry. As vehicles become connected technology can be integrated across the auto ecosystem driving related change in multi-modal travel, parking, driver safety and insurance, car and ride sharing platforms, local search, local services and much more.

Thirdly, the Connected Car Fund supports the Nokia company HERE, whose navigation systems power 80% of the telematics systems in the auto industry. HERE’s auto sector insight, expertise and network will benefit both NGP and the companies in which we invest. Our prior investments in image sensor companies (Heptagon, InVisage and Pelican Imaging) and location powered technologies like Verve Mobile have technologies applicable to Connected Cars. This fund will leverage our existing global investment activities in the U.S., India, China and Europe and brings up our assets under management to $700 million.

We are excited about the launch of the Connected Car Fund. We look forward to investing in entrepreneurs and companies that are changing the face of the auto industry much as we have for the mobile industry for the past decade.

 

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