As an investor with Contrary Capital, free-lance advisor for Southeast startups, and leader of Emory's entrepreneurship organization, I frequently have conversations with founders who are looking to synthesize their "story" prior to raising seed funding. In this series, I attempt to ask the same questions of startups that have raised early stage funding from top-tier venture firms, and then back into what may have been their answers (albeit through the lens of my industry perspective).
Startup: Smartcar
Backers: New Enterprise Associates, Andreessen Horowitz
Raise: $10m (Series A)
What is the simplest form of the business proposition (the Lobby Pitch™)?
Provide "connected car" applications with real-time, vehicle-specific data elements, through standardized API-based middleware that does not require additional hardware.
Are they creating "space" or positioning against established players?
Smartcar solves two major problems:
- Real-time access to data such as fuel tank status or tire pressure has historically been limited, with only the largest freight and trucking companies with thousands of expensive assets choosing to invest in enabling technologies. By partnering with OEMs to extract raw, ECU data, more companies and industries can take advantage of these potential insights.
- Development of "connected car" applications has been limited by proliferation of bespoke hardware or deep partnerships with OEMs. Relieving third-party developers of this burden can usher in a new era of applications, similar to how Plaid influenced the fintech space.
In this way, Smartcar could be the enabler of new solutions, and therefore is positioned to be the preferred provider of this service. Early "connected car" entrants such as Automattic could make a play in the data-broker B2B space, but initially, Smartcar seems to be in a league of its own.
What does "product-market fit" / "stickiness" look like?
In its core verticals / use cases, Smartcar should expect to be the sole or preferred service provider for this data. Therefore, a high volume and percentage of requests should go through its API, indicating that developers are building their solutions through Smartcar versus around Smartcar. And similar to API-centric offerings like Twilio, Smartcar should be the defacto brand around automotive data.
What would "success" mean in the 5-year horizon?
Smartcar initially supports a limited number of OEMs, so success will center around building enough market presence to convince others to partner with Smartcar or at least support its platform. This would require heavy investment in customer success for leaders in core verticals (ridesharing, fleet management, insurance, etc.) to refine their use cases and bubble up Smartcar's data beyond analytics into continuous operations or even product features. The goal for Smartcar should be a "long-tail" of viable connected car solutions that are powered off Smartcar's data.
What are some market forces (headwinds or tailwinds) that could impact that?
The largest players in Smartcar's largest market, ridesharing, are also deep-technology companies with significant market power. Smartcar should expect home-grown solutions at these companies, and, while unlikely, prepare for the possibility those solutions may hit the market. OEMs are also moving towards new ownership models (e.g., Audi's subscription offering), and while they are likely to initially out-source this layer of their stack, continued trends away from vehicle purchasing may encourage them to reconsolidate ownership of this data. Finally, autonomous vehicles will be built ground-up to enable easy data capture and transmission, so when they arrive and have mass market appeal, Smartcar may be cut out of the equation.