London-based Deliveroo uses cars, bikes and scooters to deliver meals. Silicon Valley’s Peloton creates autonomous systems for long-haul trucks. Global giant Nokia remains an industry-leading telecommunications maker.
What do these three have in common? Not much at first glance.
But Paul Asel, a managing partner for Nokia Growth Partners, the telecommunication giant’s venture capital arm, sees them all as part of a tightly linked chain that speaks to the tremendous disruption happening across transportation.
Asel says he and Nokia have begun focusing their investments on transportation because they believe a revolution in transportation, led by long-haul trucking, is going to send out ripples that transform nearly every part of the global economy.
“A lot of the tasks that were previously done offline for trucks are now being digitized, and it’s going to impact this industry tremendously,” Asel said. “But if you start thinking through different industries that trucking impacts, it becomes even more significant. That’s why I’m investing in this space.”
NGP, as it’s commonly called, has three main investment areas: digital health, connected enterprise and mobility. When most people think of “mobility” and Nokia, they tend to think of the telecom equipment it still sells, as well as the smartphone business it exited a few years ago. But NGP defines mobility far more broadly, as it says in its mission statement:
“We’re betting on the possibilities of a Connected World — safer, cleaner, more intelligent and affordable transportation, as well as transportation-as-a-service. Our cities will have fewer cars but offer more options to reach our destinations faster and inexpensively, particularly via autonomous vehicles. We invest across the transportation value chain from consumer applications to fleet management and smart city mobility innovations.”
NGP joins a growing wave of venture capital firms attracted to transportation. Over the last four years, as mobility has become a greater focus, NGP invested in several companies, including Fetchr, which is focused on reinventing logistics for the Middle East and northern African regions; Meican, a food delivery startup in China; and Zubie, a connected car services company in South Carolina.
When NGP first began looking at mobility and transportation, discussion about autonomous was focused around consumer vehicles. Asel felt then that optimism was misplaced and the economic case was not there. Lately the automotive industry’s conventional wisdom regarding self-driving vehicles has shifted as well.
“We were one of the first investors to say it’s going to take a lot longer for autonomous driving to have a big impact,” he said. “The euphoria that was in place a couple of years ago, that everyone will be sitting back in their cars sipping margaritas, that’s decades away.”
But Asel is bullish on the roles heavy trucks will play in driving adoption of new connected and automated technologies.
“Because of the costs of dealing with the drivers, technology that brings labor cost savings are going to be adopted by trucking first,” he said.
NGP is on the lookout for connected technologies that provide more intelligence inside the cab to bring new efficiencies for drivers and dispatch centers. Given the economic imperatives to control costs, improve safety and push new efficiencies, Asel said he focuses on technologies that can have practical applications today.
Its investment in Peloton is a perfect example of this.
Founded in 2011, the Silicon Valley startup makes platooning technology that can be installed in existing fleets of truck. The company has raised $78 million in venture capital from a wide range of industry partners and venture firms, including NGP. Peloton’s experience also highlights how complicated it is to bring autonomy to trucking.
Persuading various companies that make the brake systems to allow the Peloton technology to access their components took a couple of years, Asel said.
Even if it’s taking a while for all those autonomous pieces to fall into place, a company like Peloton can still have a big impact in the short term.
“You can use semi-autonomous driving to reduce the distance between the lead and following truck and you can save 10 percent on gas,” Asel said. “That will be on the market in a few months.”
But to highlight NGP’s larger vision, it helps to look at the other end of that investment spectrum at Deliveroo, a U.K.-based startup that uses a combination of bicycles, scooters and cars to deliver meals from local restaurants. It’s a fiercely competitive market, but Deliveroo has raised a staggering $860 million in venture capital from a broad range of investors that also includes NGP.
Meal delivery sounds mundane. Companies like Domino’s Pizza have had home delivery for decades, after all. But a company like Deliveroo is extending on-demand ordering to a wider range of local merchants, Asel said. And as it does so, it’s creating a delivery network that can be potentially expanded to other goods and services.
And this is where he sees the connection to trucking. As truck fleets move to semi-autonomous and then fully autonomous, shipping prices of many goods are going to tumble dramatically. In addition, new logistics technologies will be deployed that will wring out inefficiencies in everything from freight brokerage services to use of shipping containers.
“We believe as the marginal cost of delivering goods and services declines, there will be a lot more services that people choose to use in terms of last-mile delivery,” Asel said. “If we think through the last-mile implications, it’s not just food delivery. As soon as you start thinking through the ripple effect of this, it really becomes exciting.”
But this all raises a fair question: What’s in it for Nokia?
NGP wants first and foremost to invest in sectors and companies where it sees big opportunity, Asel said. An investment does not necessarily need direct implications for the corporation.
Nokia itself has been in transformation mode for several years, placing a heavier emphasis on technologies like the Internet of Things, cloud computing and pushing development of next-generation 5G mobile networks.
Those more robust networks will be an essential ingredient in allowing better communication and data transfer between all those connected vehicles. In this world, trucks become giant sensors collecting all sorts of valuable information.
“Vehicles are now going to be endpoints in a connected environment,” Asel said. “They are going to have myriad real-time data coming out of them. And that has enormous implications for thinking about not just navigation efficiency, but mapping that data back to smart cities and smart governments to drive better decisions about services, resources and the environment.”
Thinking through the different industries that will play a major role in the data evolution is significant because they will have the potential to positively impact society, he said.