Today’s automotive and transportation industries are vulnerable to disruption. Car sharing, ride-hailing, electrification, connectivity, the rapid emerge of autonomous vehicles in passenger and industrial transportation, and the demand for ‘mobility as a service’ are potentially as game-changing as the switch from horse and cart to the car and the railways. Corporate venture capitalists from a widening group of industries, including insurance, logistics and software as well as the established automotive and transportation sectors are therefore seeking and backing new technologies and business models. On December 1st Global Corporate Venturing will publish a new report on ‘Venturing and the future of mobility and automotive technology’, which will capture the most interesting deals and investment activity in this fast-moving space. The report is sponsored by Castrol innoVentures, Denso and Magna, whose representatives will also be among the speakers at a Global Corporate Venturing conference on mobility and automotive technology in London on December 1st, and at the 2017 Global Corporate Venturing and Innovation Summit in Sonoma on January 25th and 26th.
Jonathan Tudor, director at BP Castrol innoVentures, sets out his venturing strategy below. Connectivity, autonomy, efficiency and mobility as a service are key themes. Just in case you’re wondering, Jonathan drives an S Jaguar and a BMW i3.
Tom Whitehouse: Please explain your venturing strategy.
Jonathan Tudor: The role of Castrol innoVentures is to create new value and new revenue streams for Castrol, which is a part of BP. Our investment strategy is driven by emerging opportunities and trends that we regard as important and that we need to understand better. If a strategic opportunity emerges as a result of our investment, we could pursue it and develop it into a new business strand. If not, we will act just as a financial investor. But we’re not a typical corporate VC because we’re involved in more than investment. We also do internal venturing.
TW: Ok, let’s start with your investments. Please provide some examples of companies you’ve invested in and say why.
JT: We know that one very important development in the transportation sector is connectivity. More and more passenger and industrial vehicles are going to be connected to the internet. We need to learn about the market dynamics, what will drive early adoption and what our role should be. So we invested in Zubie, a US-based telemetry company that provides data for insurance companies, fleet performance for business users and consumers. Connectivity and telemetry are going to have a huge impact on transportation. There’s going to be a much more dynamic relationship with insurance and entertainment industries, for example.
TW: Other than connectivity, what other themes are driving your investment strategy?
JT: Big data, AI and machine learning are big factors in increasing transport efficiency and in the emergence of autonomous and semi-autonomous vehicles. We invested in a Danish business called Greensteam, which helps its shipping customers save fuel by understanding their data and making real-time recommendations on how to improve efficiency, and on things like how quickly their propellers are fouling up. We invested in Peloton, a California-based semi-autonomous vehicle technology business. It enables heavy vehicles to link together in a tightly-knit peloton (hence the name) to reduce fuel costs and increase safety. Through Peloton, we’re finding that trucks are moving more quickly to autonomy than passenger vehicles. It’s helping us understand what our role could be in this area.
TW: What’s the connection between your investment strategy and the Castrol brand?
JT: Castrol has a long history of consumer trust and awareness. We’re keen to see that continue in a digital environment. So our first investment was in 2012 in a company called RepairPal, a Californian business which certifies car repair shops to provide transparency to the customer and to increase the level of service. RepairPal was a way for Castrol to understand the impact of digital innovation on our industry. The company tackles head on the question of how you digitise your relationship with your vehicle and how you create trust between the vehicle owner and the repair shop or garage that services the vehicle. And through our investment in RepairPal, we learned that you had to digitise the whole workshop. This then led to our investment in Autino which is set on a further digital transformation of transport. It’s providing the type of simplicity and convenience to vehicle owners across a range of services that they are used to getting in pizza delivery.
TW: Let’s talk about internal venturing.
JT: Ok. These is when we look at our customer base, inside and outside transport, identify its needs, and try to provide them, typically in joint ventures. We have tens of thousands of customers in manufacturing, in metal-cutting for example, who can optimise their efficiency and reduce costs through better management of data and through machine learning. This is what Castrol Optis does. It’s a joint venture with TechSolve, a US-based specialist in process improvement. Nexcel is another good example of internal venturing. Nexcel packages the oil and filter into a single, easily removable container, just like a print cartridge. This was launched with Aston Martin and brings lots of improvements in engine design and efficiency.
TW: What innovations are you looking for right now? What types of investments? What are the trends that you want to understand?
JT: Mobility is going to be a big theme for us. We see new generations happy to access rather own vehicles. They want mobility as a service. This is already creating businesses with great prospects such as Uber and Lyft. We’ll soon be announcing our first investment in this space. I doubt it will be the last. Then the other areas of great interest to us are simply the better utilisation of energy in transport, whether that’s in an electric vehicle or in an internal combustion engine. We’re also looking closely at machine learning, AI and data, particularly in a manufacturing context, which could become channels for Castrol Optis. And we will continue our interest in advanced materials and chemicals that can make our products cleaner and greener.
TW: What do you drive?
JT: I drive a portfolio S Jaguar and a more environmentally friendly BMW i3 electric vehicle.