The pace of change in the automotive industry is accelerating to evolve as a cause of concern for organizations. The industry has moved from being a hardware transaction-focused business to one that concentrates on software. This, in turn, has a transformative effect on several business models, not just for the manufacturers’ but also for others in the ecosystem— suppliers, dealers, service providers, and the like. The industry has to constantly expand and adapt to these changes to meet new requirements. Fraser McCombs Capital steps into this rapidly changing industry to aid in the process of turning dreams into reality by investing in ideas belonging to startups as well as established players in this sector.
"We work with clients at different stages of business development—we invest in and partner with both established companies and the ones who are still finding their feet in the automotive landscape"
What are the emerging technology trends that could help companies in tackling the challenges in the automotive sector? How are AI and other technologies being used in this sector?
ACES, or Autonomous, Connected, Electric, and Shared mobility models is the center of attention. We are also seeing significant trends in e-commerce and distributed manufacturing and other key areas like Edge computing, subscription services, and shared mobility models, which rely and chiefly perform on connectivity.
Autonomous driving is one of the ultimate applications of AI that helps in creating and teaching the driver, based on digital inputs and deep learning. Every aspect of technology, including AI, 3D printing, and even quantum computing has applications in the automotive industry. They may be used in selling merchandise vehicles, Salesforce deployment, or training professionals in the repair ecosystem to increase efficiency.
Can you tell us about the projects and initiatives you have undertaken?
We are applying the principles in radar to automotive sensors that leverage new technology such as 3D printing to deliver improved cost, form factor, and reliability, which will also help vehicles function optimally in varying weather conditions.
As the proliferation of connected vehicles takes over the market, we can expect that most vehicles in the assembly line will be embedded with the same concept in a few years. Currently, companies like Motorq aids fleet and fleet management companies in reading a variety of data inputs from information regarding the vehicle’s manufacture, after-market plug-in devices, and the like. By standardizing this data, meaningful insights can be garnered across disparate vehicle types. With the awareness that the market will soon overflow with connected vehicles, we are working with different autonomous applications without trying to manage the complex driving environment. The pace and spread of change excites us, as do the ideas of the companies we are investing in, who leverage connectivity in varied shapes and forms.
How do you identify potential partners or solution providers?
We have a highly focused team that concentrates solely on automotive and auto-mobility investment startups. Our passion and expertise in this niche leads us to look for companies with similarly spirited management teams; at the same time, their compliance with technology solutions is important to us. Together with an attractive business model, these aspects create a three-legged stool for an exciting niche in the marketplace. Through our investments, we help in turning a great idea into a flourishing business. We are highly interested in companies providing on-demand services and fleet management or data analytics. A potential client’s strategy, product roadmap, and the white space they have identified in the marketplace are deal breakers for us. Oftentimes, we also create initial startup teams for potential hires to fill gaps in their leadership teams. In addition, we help them in sales, business development, as well as product and financial requirements.
How do you differentiate yourselves from similar companies in the marketplace?
Unlike most investors, our company comprises a management team that has managed startups and built them to scale in the past. This helps us in identifying ecosystem-wise missing links for clients, so we do not remain mere investors or money-managers but proffer advice through their challenges and opportunities. We realize that a significant amount of effort is needed between the start and sale of a business, including the addition of resources to create a management team having complementary skills or experience.
Our guidance also proves useful in making deductions about doling out their teams to acquire customers and developing a syndicate of follow-on investors. We aid in confidential partner introductions and mentor our clients even during the buyouts of their businesses. Together with the operating experience of defining priorities in the day-to-day functioning and governing of the business, we help in improving the business rapport.
Post-investment, how do you work with your clients?
We work with clients at different stages of business development—we invest in and partner with both established companies and the ones who are still finding their feet in the automotive landscape. While seed stage companies might receive scheduled monthly calls as they learn to navigate this sector, we take an ad-hoc role in growth-stage companies, where we have bi-monthly or quarterly review meetings. We seek to further their growth and improve revenue to profit the client’s team members and investors. We often mentor entrepreneurs going through difficult phases in their business.
What is your advice to your colleagues?
I cannot stress enough on the need to be aware of one’s own strength in today’s competitive marketplace. While we continue to learn from our experiences every day, it is essential to remember what brought us here—and utilize our experiences to make a better tomorrow.