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Automotive startups: Why is the hottest trend in Silicon Valley?

Entrepreneurs who develop technology or services around the auto driving industry have the chance to win in Silicon Valley.

Figures from the consulting firm specializing in entrepreneurship, CB Insights, reported that at the end of 2017 the startups focused on autonomous development captured 76% of the total investments made in projects of the automotive technology industry in general, item that totalled annual investments by 4,000 million dollars, according to the data of the firm.

Autonomous start-ups totalled 77 investments in 2017, above the 62 obtained in 2016.

The report of CB Insights warns that they are “the corporations with deep pockets” those that are pushing the tendency in this type of investments; Plug & Play, one of the most dynamic accelerators in Silicon Valley -with operations in Mexico- and more than 200 annual investments told Expansión that the mobility sector is one of its strongest pillars, followed by insuretech or financial technology focused on insurance and retail.

Miles Tabibian, one of Plug & Play’s business advisors, told Expansión during a visit to the offices of the accelerator in Silicon Valley, that some of the companies that have most frequently sought them out to get closer to startups are the ones from Automotive branch.

Firms such as Nissan, Daimler, Bosch, Faurecia and other supplier brands or car manufacturers seek meetings with startups accelerated by Plug & Play, especially those already in a stage of maturity or with a viable minimum product, which can be supported to complement its innovation processes or iterate more quickly in the face of the autonomous trend.

Some of the technologies with greater demand are those related to telematics, communication between machine and machine (M2M), internet of things and cybersecurity solutions in autonomous cars, according to the CB Insights report.

In a report prepared by the financial institution BlackRock on the future of the automotive industry 2017, he argues that, although it is complicated to propose a detailed timeline regarding the adoption of the self-employed, it is expected that a significant proliferation of 2020; However, the document notes that in view of the high access to capital in the valley in recent years, investors should begin to be more cautious about their investments.

“We believe that investors should begin to be more selective in investments in the race for the future of vehicles because it will create a wide dispersion between winners and losers,” the document quoted.

While startups such as Uber or Lyft make alliances with major developers or automakers, other independent autonomous development firms such as Faraday Future today, after almost four years of its foundation, is almost extinct and without production of its autonomous model, which was released during the 2017 CES.

Stephen Zoepf, director of the autonomous driving development institute at Stanford University, warned that although in recent years the boom for the self-employed has taken many of the spotlight and portfolios in Silicon Valley, it is vital that in the following five years, players begin to give results or they may see their next rounds of funding compromised.

“Authenticity is needed. Sooner or later you are going to have to prove that you are truly what you say you are; I think that soon there will be a moment of ‘the emperor’s clothes’ in Silicon Valley and if you have been installed here for three or four years and you can not show where the investments have gone convincingly they will leave or they will not have funding ” he said.

Photo by Alessio Lin on Unsplash

Also published on Medium.

Published inStartups

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