Top AutoTech Deals of 2021

2021 was an interesting year. We experienced record highs in the stock market, record levels of investment and M&A, a record number of IPOs fueled by the special purpose acquisition company, or SPAC phenomenon, and the highest company valuations on record, including both software companies as well as the valuations of physical dealer locations, which also experienced the largest numbers of deals done in any calendar year.

With that, I want to take the opportunity to highlight the top 10 largest and/or most important AutoTech deals of the year.?

1. Rivian IPO

EV automaker Rivian delivered the largest IPO of the year, with a total market value of $78 billion at launch, quickly running up to more than $100 billion its first day -- outstripping any other OEM’s value, other than Toyota and Tesla.

?Also, this year, we saw a number of other EV automakers take the opportunity to go public, including Lucid and REE.

2. Action in the B2B Auction Space

2021 witnessed ACV Auctions’ successful IPO, as it climbed 25% in its trading debut. Its investors raised $414 million in an IPO priced above a marketed range, providing an initial total market value to the company of $4.8 billion.?

ACV then acquired MAX Digital, a pioneer in automotive data and merchandising products and best known for its flagship inventory management system platform FirstLook. That transaction was valued at $60 million.

In August, KAR Global announced they were acquiring CARWAVE for $450 million.

With the back-to-back acquisitions of first BackLotCars for $425 million and then CARWAVE, KAR Global signaled to the market that they’re “all-in” on online sales, and willing to take on ACV (and all others) in the digital realm.

Finally, in the physical auction space, we saw two significant transactions involving XLerate Group.

?First up, we saw XLerate sell to Private Equity group Brightstar Capital Partners for an undisclosed amount. Then, in December, XLerate announced the acquisition of America’s Auto Auction.?Terms of that transaction were not disclosed.

?After the combination, XLerate and America’s will have a total of 39 auction sites across 19 states, as well as growing digital and mobile auction businesses and related financing.

3. Global Interest in Online Used Car Retailers

This year saw multi-billion-dollar IPOs of Europe’s Auto1 Group ($2.2 billion) and the UK’s Cazoo ($8 billion).

Closer to home, we saw Canada’s Clutch raise multiple rounds of funding, including a $100 million CAD Series B from D1 Capital Partners.

?Last, but not least, we saw Latin America’s Kavak raise $485 million at a $4 billion valuation.??

4. Monster Funding for Tekion

Tekion is a cloud-based automotive software provider, taking on big industry players Reynolds & Reynolds and CDK Global in the Dealer Management System (DMS) category, which generates about $2.0 billion per year.

The company more than tripled its valuation to $3.5 billion after raising $250 million from investors including Durable Capital Partners and Alkeon Capital Management.

Hyundai and existing investors Advent International and Index Ventures also participated in the round.?

Tekion plans to add larger vehicles such as RVs and boats to its platform. It is set to expand both domestically and internationally, beginning with France by the second quarter of 2022, followed by the U.K. and Germany.

Tekion’s approach is to modernize the approach to enterprise software for both OEMs and dealerships, which has caught the attention of big-name investors and propelled them to a very high valuation.?

5. Damage Detection Is Hot ?

At the very beginning of the year, Cox Automotive announced they were acquiring Fyusion for an undisclosed price.

Just a couple of months later, KAR Global led a $15 million investment into damage detection company Ravin.ai.

Later in the year, we saw UVEYE raise a $60 million Series C round led by CarMax.

And then, Tractable raised a $60 million Series D from Insight Partners and Georgian Partners at an over $1 billion valuation.

Accurately representing a vehicle’s cosmetic and mechanical condition is key to enabling online B2B vehicle transactions.

In addition, companies like Tractable have made progress integrating their solution into the insurance industry to diagnose the severity of damage after the vehicle is in an accident.?

6. CCC Intelligent Solutions IPO

CCC Intelligent Solutions, a SaaS platform for the property and casualty (P&C) insurance segment, went public in July by merging with SPAC Dragoneer Growth Opportunities Corp.

The IPO received net proceeds of $605 million, and the total market value of the company was $7 billion.

CCC has announced plans for important new solutions that will support the P&C economy’s ongoing digital transformation and vision to achieve straight-through processing.

?CCC plans to fully digitize the estimating process for a portion of repairable claims. Their new solution is designed to employ advanced AI, insurer-driven rules and CCC’s vast network connections and is expected to help customers realize automated estimating in mere minutes and elevate the customer experience.

They have plans to incorporate advanced AI into their collision repair platform to apply machine learning to pre-populate estimates based on photos of vehicle damage and configurations by repair facilities to accelerate the repair process.

7. AEye IPO

AEye is a lidar startup that developed its technology for use in autonomous vehicles as well as to support advanced driver assistance systems in passenger cars.

The company IPO’d earlier this year through a merger with CF Finance Acquisition Corp. III valuing the company at about $2 billion.

AEye is one of several lidar companies that have expanded its focus beyond autonomous vehicles.

AEye’s pitch is that the company’s lidar technology, along with its partnerships with Tier 1 and Tier 2 suppliers like Continental, makes it well-positioned to scale and to be adopted by major automakers.

AEye’s lidar sensor scans the surroundings and then, with help from its perception software, identifies and focuses on relevant objects.

8. Consumer Vehicle Insurance ?

First up, DealerPolicy, the automotive insurance marketplace, announced its $110 million Series C investment led by Goldman Sachs after raising $30 million in February of this year. The company's pre-money valuation was $450 million.?

?Second, CDK Global announced that they would acquire Salty. Deal terms were not disclosed.

Historically, many dealerships set up their own in-house insurance agency, with mixed results.

Salty and DealerPolicy have figured out a different way to enable dealers to introduce vehicle insurance into the car buying process.

Finally, Lemonade bolstered its nascent auto-insurance business by acquiring pay-per-mile insurer Metromile in its first acquisition.

The deal values Metromile, which went public via a merger with a blank-check company earlier this year, at roughly $500 million, a fraction of its $1.3 billion equity value when they went public.

9. Otonomo IPO

Otonomo is the cloud-based software startup that helps companies capture and monetize connected car data.

The Israeli-based startup agreed to merge with SPAC Software Acquisition Group II with a valuation of $1.4 billion.

Otonomo launched in 2015 with a cloud-based software platform that can capture and anonymize vehicle data, which can then be used to create apps to provide services such as electric vehicle management, mapping, subscription-based services, parking, usage-based insurance, traffic management, media and emergency services.

The company’s platform is used by 16 vehicle manufacturers, fleets and more than 100 service providers.

Their platform ingests more than 4 billion data points per day from over 40 million global connected vehicles.?

10. CarMax Acquires Edmunds

The acquisition of Edmunds increased CarMax’s position from the $50 million minority investment they made early in 2020.

The total enterprise value of the transaction was reported to be $404 million; Edmunds had revenue of $140 million in 2020.?

CarMax, the largest used-vehicle retailer in the U.S., worked with Edmunds to develop an online instant-offer tool for sellers of used autos.

CarMax will leverage Edmunds’ strong traffic (with 16m visits per month) to reduce cost of acquisition; CarMax spends $191 million per year on marketing vs. Carvana at $286 million?(both are 2020 full-year numbers).

Let the blurring of lines in the automotive space continue, as historically-defined silos are knocked down.

Bonus: 2021 Was The Year of Big Exits in Digital Retail

2021 was the year that the largest strategic players made their Digital Retailing bets.

Examples included Prodigy selling to Upstart for $100 million, Gubagoo selling to Reynolds & Reynolds for an undisclosed amount, Roadster selling to CDK Global for $360 million, and Darwin Automotive selling to J.D. Power for an undisclosed amount.

The Digital Retailing landscape has become very competitive, with many stand-alone solutions; large players like Cox Automotive and Cars.com made their bets long ago.

The whole segment was buoyed through COVID: every dealer needed a solution to sell vehicles online; and the “Carvana Effect” has also provided dealers a sense of urgency to get in the game.

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Steve Greenfield is CEO and Founder of?Automotive Ventures, LLC, helping entrepreneurs raise money and maximize the value of their companies. He has over 20 years of experience in the automotive technology space. He started his career in 1999 selling software to car dealers, and has overseen more than $1 billion in automotive technology acquisitions.

Note:?This article was?originally published in the?Automotive Ventures January 2022 Intel Report.