Auto corporations promising billions in new software program income by the top of the last decade have been hiring engineers left and proper, poaching executives from tech giants and attempting to determine find out how to course of and monetize the oodles of knowledge that related vehicles produce.
One would suppose this could translate to fertile floor for startups whose mission is to assist carmakers promote information. As a substitute, two high-profile corporations within the house — Otonomo and Wejo — have been in dire monetary straits.
Otonomo, an Israeli startup that went public by merging with a particular function acquisition firm in 2021, reported simply $2 million of income within the third quarter. Whereas that was up 12-fold from a yr earlier, losses widened. In December, the corporate reduce jobs to protect its dwindling money. On Thursday, Otonomo introduced plans to merge with one other firm, a digital roadside-assistance agency known as Urgently.
Wejo, a British startup that additionally accomplished a SPAC merger in 2021, is taking the artistic path to shoring up its funds. After issuing a going-concern warning final yr, it’s within the strategy of merging with one other blank-check firm — a transaction that Bloomberg Opinion columnist Chris Bryant has dubbed a Re-SPAC — to safe $100 million in recent funding. Wejo’s objective is to be cash-flow constructive by 2025.
The Common Motors-backed firm is succeeding and rising regardless of the macroeconomic local weather, a Wejo spokesman stated in an e mail. It expects to triple or quadruple income this yr, although gross sales amounted to simply $4.8 million within the first 9 months of 2022.
So why the disconnect between automakers’ hefty software program spending and Wejo and Otonomo’s paltry income?
Every carmaker and provider is capturing information in a different way, and there’s no one standardized format. That’s what these startups want to do — scrub, standardize and arrange information so it may be helpful to 3rd events together with insurance coverage corporations, fleet managers and metropolis planners.
The problem is that carmakers don’t wish to share all that a lot, or they cherry-pick information to share that, by itself, isn’t all that helpful to exterior patrons. One other constraint: some information is barely priceless within the mixture, when supplied by many automakers.
For instance, if a metropolis planner in Paris wished to trace parking-spot utilization, they’d wish to see all of the vehicles parked in a specific space at a given time — not simply the sliver of manufacturers which have a knowledge settlement with Otonomo.
By the identical token, a rental-car firm with a number of manufacturers in its fleet would need predictive-maintenance information on the entire fleet — not simply a few of its vehicles. When you can’t see the entire pie, slices aren’t price paying for.
Getting a lot or the entire auto business to provide the identical type of information to 1 market might be a steep hill to climb. Carmakers are more and more seeking to do a few of this analytics work in-house, as a result of they wish to construct new options and cost subscription charges.
Ford, which stated final fall that it’s increasing a deal with Wejo to assist course of automobile information for insurance coverage corporations, sells information by a number of channels — startups, insurance coverage corporations, information aggregators — relying on the use case, a spokesman stated. As for BlueCruise, the superior driver-assistance system that it gives as a subscription service — Ford handles the information in-house.
The thought of a single information market is sensible in concept, however thus far it’s been laborious to get off the bottom. One former startup govt in contrast the scenario with the 1989 movie Subject of Desires, the place Kevin Costner constructed a stadium in a corn discipline to lure the ghosts of well-known baseball legends. Otonomo and Wejo constructed the marketplaces, however no one got here.
Perhaps these corporations will land on a mannequin that works. The auto business has been speaking about related vehicles for a number of years, and but it nonetheless looks as if it’s simply getting began.
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