Autotech Ventures, a venture capital firm focused on ground transportation startups, has announced plans to expand its investment horizon to include fintech startups related to the automotive and mobility sectors.
The firm recently closed a $230 million fund, which will be used to invest in seed through Series C mobility-related startups, TechCrunch said in a Thursday report.
According to Alexei Andreev, managing director of Autotech Ventures, the newly closed fund has similar investment strategies to the previous two funds.
“However, one of the fastest areas of growth is SaaS-enabled fintech. Auto commerce is inefficient and there are large pockets of profit to capture,” he told TechCrunch in an interview.
The firm also predicts that there will be a recession soon and it is identifying areas that benefit when the economy softens, and fintech ventures that are poised to grow during a recession seem to be one of them.
One of the fintech startups that Autotech Ventures has already invested in is Yendo, formerly known as Otto, a Dallas-based startup that lets customers borrow against their vehicles at the same interest rate as standard credit cards.
Other such investments include buy now, pay later startup Bumper and Carpay, a buy here, pay here loan servicing SaaS platform for car dealers.
Autotech Ventures Considers Investing in Circular Economy
Apart from fintech, the firm is also investigating investment opportunities in the circular economy, a nascent industry that focuses on reusing materials and products.
This sector has garnered investment and attention as automakers transition toward electric vehicles from gas-powered vehicles.
Andreev also mentioned that Autotech Ventures is cautiously wading into generative AI, although the company has not made any investments in this area.
The VC firm, with more than $500 million under management, has previously invested in over 40 companies operating in various sectors.
Some of the firm’s investments, such as DeepScale and Xnor.ai, were acquired by Tesla and Apple, respectively. Five of the firm’s startups have gone public, including Indie Semiconductor and Volta Charging.
Automotive and Mobility Sectors Rise Again After Being Hit During Covid
The COVID-19 pandemic brought unprecedented challenges for all industries, including the automotive and mobility sectors. The industry witnessed a significant decline in car sales and mobility demand amid extended global lockdowns.
However, as regional and everyday mobility started returning to pre-COVID-19 levels, the automotive and mobility sectors made a strong comeback.
Notably, the hottest trend in this sector is currently electric vehicles.
The availability of government incentives, advancements in technology, and the growing concern over the environment and sustainability have all made automakers shift their focus on producing electric and hybrid vehicles to meet the increasing demand for eco-friendly transportation.
The push toward electric cars also comes as EV sales have skyrocketed over the past few years.
As reported, Global EV sales rose 68% YoY to 7.8 million units last year, with electric vehicles accounting for almost 10% of total car sales in 2022.
This has also led to other major auto companies doubling down on their EV efforts. For one, Volkswagen has recently unveiled its new affordable electric concept car intended to be priced below €25,000 ($26,500).
Likewise, Toyota has recently adopted an “EV-first” mindset as the manufacturer redoubles its focus on electric vehicles.
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