💸Su$tainable Mobility: Fintech Meets Mobility with Marcos Fernandez at Fiat Ventures
Vol 52
This bi-weekly newsletter aims to separate the signal from the noise for making money in sustainable transportation: Electrification, mode shift, active and public transit, and mobility aggregation, across both people and goods movement.
This week’s Deep Dive is a Q&A with Marcos Fernandez of Fiat Ventures about where fintech meets mobility.
Upcoming conference alert: CO.MOBILITY Summit offers a unique opportunity for you to learn about the latest advancements in electric and autonomous vehicles, SmartCity innovations, freight technology, and Quantum tech. May 9-11 in Chattanooga. More info at the bottom of the newsletter.
Submit startups & ideas for the newsletter here.
🌱STARTUP WATCH: Sustainable mobility startups (pre-seed or seed) to keep an eye on
Autev (Washington, USA): On-demand autonomous EV charging robot
Beacon AI (California, USA): Pilot assistance software to reduce fuel waste in aviation
Correntics (Switzerland): Climate-risk analytics software for supply chains
EVSession (North Carolina, USA): Reporting software for EV charger networks
Grounded RV (Michigan, USA): EV campervan conversions
Mitra EV (California, USA): Shared commercial EV charging hubs
Peer Carbon (Kenya): Carbon accounting platform, including fleets
PopWheels (New York, USA): Micromobility battery swap provider
Safire (Virginia, USA): Liquid-to-solid hybrid-state batteries
Wikimove (Germany): Mobility as a service software for cities
💰FUNDING: Capital raises from startups previously featured in Startup Watch
Spring Free EV (Vol 25) raised a $31M Series A from Spring Lane Capital, Climate Capital, Gaingels, and others
Swap (Vol 46) raised a $7.2M seed round from New Energy Nexus, Ondine Capital, and Kejora-SBI Orbit
📰QUICK HITS: Notable news from the last two weeks
🇫🇷 Voters in Paris overwhelmingly voted against keeping shared e-kickscooters in the city. The silver lining to this outcome is that Paris may become ground zero for e-kickscooter subscriptions and ownership.
🇳🇱 Amsterdam’s Schiphol airport may ban night flights and private jets to curb emissions, but Dutch courts aren’t convinced. The signal is getting louder for sustainable aviation and the legacy players are struggling to rise to the occasion.
🇳🇴 Also in aviation, a new scientific study analyzed Norway’s aviation needs in-depth and concluded that electric aviation would be the best match for short-haul flights with 9 to 39 passengers. Perhaps Schiphol will allow electric private jets…
🇪🇺 The European Parliament voted to approve bike parking minimums for new and renovated buildings; next up is alignment between the Parliament, the Commission, and the Council. I don’t generally love any parking minimums but I do think this could have meaningful impact.
🇺🇸 The US Treasury clarified the EV tax credit rules and car makers are scrambling to verify vehicle eligibility. While there’s still some tussling, the automakers got the message and are in the process of near-shoring their EV supply chains.
🏦 JP Morgan Chase CEO Jamie Dimon has issued his much-read annual letter and he’s worried about “China using subsidies and its economic muscle to dominate batteries, rare earths, semiconductors or EVs.” He’s right to be worried; more background in Vol 41.
🚶🏾♂️New research from the transportation consultancy Equitable Cities looks at the Barriers to Walking, Biking, and E-Scooter Use in Black Communities in the United States. There are a host of recommendations for the biking industry and land use planning, along with legal reforms. For a deep dive on the scam that is jaywalking, see Vol 9.
🛋️ IKEA shared a new report on the future of urban mobility. A red thread throughout the report is the rise of cities as mobility market makers.
🏪 Walmart has hired a director of workplace mobility, with a remit that includes getting 10% of employees at the company’s HQ to commute to work by any means other than single-passenger driving by 2025. Much ado about a small goal; there are well-known playbooks like cash out parking that can accomplish these results.
🔌 Walmart claims it will develop its own EV fast-charging network throughout the US. Keep an eye on how much Walmart outsources versus how much it does in-house, as well as what it does with its large installed base of Electrify America chargers.
🚘 A coalition of groups like Greenpeace and the Sierra Club are demanding that Toyota go zero emissions by 2035. New Toyota CEO Koji Sato will certainly be under the microscope for how he addresses zero emissions mobility over the next year.
🗺️ Tesla belatedly revealed the white paper behind its Master Plan 3. As befits its leader, the plan is focused on technical pathways, not on business models, policy, consumer behavior, etc.
🎩 Luxury EV carmaker Lucid is laying off 18% of its workforce. Lucid and Rivian are this year’s poster children for production hell. Tesla managed to survive production hell in 2017 and 2018, but this is 2023, with high interest rates and legacy OEMs fighting back.
🔋 The economics of battery gigafactories? High volumes, very slim margins.
🚕 The founders of Lyft are stepping down. There may eventually be a comeback story or a sale to a player who covets “the other” on demand transport network in the US.
🇧🇯🇹🇬🇮🇳India’s MAuto has already had a significant impact on the electric motorcycle market in Benin and Togo and is now targeting Rwanda, followed by the Democratic Republic of Congo. An emerging case study in South-South industrial cooperation.
👺Scooter operator Helbiz continues to raise eyebrows with stock buybacks and name changes. Helbiz is currently worth $13M, roughly the same as a typical seed-stage startup.
✈️ The Sustainable Aviation Fuel Alliance (SABA) made its first major sustainable aviation fuel (SAF) purchase. In essence, large corporates like Meta, JP Morgan, and BCG are helping airlines like Jet Blue offset the SAF premium over jet fuel.
🤿DEEP DIVE: Four Questions with Marcos Fernandez at Fiat Ventures on Where Fintech Meets Mobility
1️⃣
Q: Let’s start at the beginning with what Fiat Ventures is and why a fintech VC cares about mobility.
A: Fiat Ventures is the investment arm of Fiat Growth, the premier growth consultancy in the fintech space, with 35 full-time employees and over 120 clients. I joined a few years ago full-time to get our venture arm off the ground. Today, we've got $25M in funds under management and we’re going to be going out for Fund II later this year.
We think of fintech in two contexts: one, the intersection of fintech with other verticals and two, embedded fintech that are the picks and shovels that allow everyone to become a fintech over time.
So as it relates to mobility, it's a huge fintech intersection because a lot of times there are issues around payments and insurance, and how we incentive the right travel behaviors as it relates to emissions.
2️⃣
Q: I want to start with Uber, one of the biggest mobility stories of the last decade. At first, the messaging noted how the marketplace created wealth for drivers. Since then, we've had a lot of data showing a labor arbitrage, with ridehail drivers frustrated at total net pay after costs like vehicle maintenance. As a fund, do you have approaches on how fintech startups live up to financial inclusion targets?
A: I would be surprised if anyone at the beginning, even Uber founder Travis Kalanick, had any idea of the impact that they would have on the gig economy. It fundamentally changed the way that we do a lot of things and initially, you don't want too much regulation. But over time, local and federal governments do need to step in to provide those consumer protections in situations that no one really anticipates until you actually get to that level of scale.
As an investor, we have passed on startups where we saw the business logic but felt they weren’t necessarily going to leave these communities better off. We think about the world 10 to 15 years from today. And that world is much more diverse and it provides opportunities to folks who previously haven't had them. And the best suited to build those inclusive businesses are those from that community. We don't have a set diversity mandate for how we invest or even an inclusion mandate, but 44% of our portfolio being founders of underrepresented backgrounds, whether it's female founders or minority founders because of the way that they're building for these communities.
We want our companies to be so successful that they run into scalability challenges like Uber had. But at the end of the day, you want to back teams and founders who deeply care about the communities that they are building these products for.
3️⃣
Q: A lot of access to economic opportunities is predicated on access to mobility. In the US, that often means coming up against FICO when trying to buy an e-bike or an electric car. The FICO score is a flawed mechanism. What trends are you seeing in fintech to give us a better way of assessing consumer credit risk?
A: The FICO score is not a perfect system, but happens to be the best that we have in the US. It was designed under parameters that don't apply to every demographic. And a lot of times the transparency behind what's in a FICO score was intentionally opaque to try to keep it from being gamified.
Credit Karma was the first company to really provide that transparency to better understand it. Now we're starting to see the wave of startups who don't just help you better understand your FICO score, but actually help you improve it, well beyond just an Experian boost of 10 or 15 points. There's a company that we backed called StellarFi out of Austin, Texas that works with individuals in underrepresented communities in urban areas to help them improve their credit score by a matter of say, 35 to 55 points. Essentially what they do is they take your everyday bills like rent, Netflix, Hulu, and Spotify, and pay those bills on your behalf and report that to the three credit bureaus to actually help you improve it.
On the flip side, we've got other fintechs who are doing things in underwriting to better understand how to assess risk, so you can augment FICO with better data. A great example is Sigo Seguros, a fintech startup we’ve invested in that does underwriting for Hispanic populations. Hispanics in the US often avoid other areas because of their language barriers or potential immigration barriers, but that’s a different issue than assessing the risk of how and when you use transportation.
4️⃣
Q: To achieve sustainable mobility, we've got to have people choosing to not drive private cars in the city and instead participate more in the trip economy where they're using a bundle of services, whether that's bike share, public transit, scooter, or car share, to get from point A to point B. That requires a system to process billions of micro payments. Does that just become the domain of Apple Pay and Google Pay in the US?
A: Micro payments have been a challenge because there are so many hands in different cookie jars. I think Apple Pay and Google Pay have shown that it's the convenience of payment that's gonna win at the end of the day, and I don't think you can compete with them anymore in terms of getting that app in the consumer’s hand.
But there's a lot of opportunity at the infrastructure level for the way that you're accepting these payments, communication protocols, batching, and the movement of money.
More about CO.MOBILITY Summit: Over the course of three days, you'll network at multiple sponsored happy hours. You'll learn from the best and brightest across industries at TEDx-style speaker talks, heated debates, panel discussions, and even a Quantum Bootcamp. Chattanooga Mayor Tim Kelly, Kristi Montgomery (VP of Innovation, Research & Development, Kenco Group), Eric Fuller (CEO, US Xpress), and Dr. Duncan Earl (President and CTO, Qubitekk), are just a few incredible minds on our roster of speakers. The event will be headlined by Steve Case, co-founder of America Online and CEO of Revolution.
