Perspective: Toyota’s investment in Finnish mobility startup MaaS Global

Perspective: Toyota’s investment in Finnish mobility startup MaaS Global

Last week, Helsinki-based MaaS Global Ltd announced a EUR 14.2 million funding round, which included Japanese automaker Toyota as lead investor (reportedly EUR 10 million). This was excellent news both for company, and the whole early-stage VC scene in Finland (it was one of the largest rounds this year). MaaS Global has developed Whim, an app which brings together all means of travel, by integrating different travel providers into a single mobile service. Whim was first introduced in Helsinki in 2016, and is expected to launch on European markets later this year.

The mobility space is currently one of the hottest in VC. Underpinned by the sharing economy logic, new mobility services delivered by mobile apps enable the separation of ownership and usage of physical assets, in this case vehicles. It represents a gigantic disruption, and it will only magnify once autonomous vehicles roll-out. Already now, instead of owning a car, people can “bid” for single journeys, or “packets” of mobility, and consume them on a pay-as-you-go basis. Here, is exactly where players like MaaS Global come in.

According to a recent report by Goldman Sachs, the mobility value chain will include an “aggregator” layer on top of e.g. optimizers, managers, owners and vehicle manufacturers. MaaS Global’s target is to become a leading global aggregator. The aggregator’s position is coveted, because it is the point of contact to the end user (consumer), i.e. the app through which a broadening range of mobility options, including ride sharing, taxis, public transport (road/water), bicycle hire and other options are accessed. Maas Global, however, is not alone in pursuing the strategy, and it is up against serious competition. For example, the more mature and well-funded Citymapper, Transit and Moovel are all active in the space. Google is also developing similar features and services into Google Maps.

As the mobility ecosystem is being reshaped, traditional car manufacturers (OEMs), in particular, are uneasy about their future role. They fear a “Nokia(mobile phones) scenario”; being outcompeted by new business models and content, or, a “Foxconn scenario”; becoming a volume manufacturer with price as sole differentiator. OEMs are determined to avoid this. Hence, they are investing heavily in technologies, software, services and infrastructure – all key components of the emerging mobility ecosystem (in addition to their manufacturing capabilities and brands). Ultimately, OEMs want to stay/get ahead in the future value chain. This is the backdrop against which Toyota’s rationale for the deal should be viewed.

Toyota is a strong partner for MaaS Global. It is the world largest automaker both in terms of volume and market cap, and an active investor in the mobility space. Last year, the company announced a strategic investment (sum undisclosed) and auto leasing deal with Uber. Earlier this year, Toyota participated in the USD 45 million funding round of Getaround, a San Francisco based car sharing company.

Congrats to MaaS Global, and good luck on the journey!

Author: Wilhelm Lindholm, Partner, Chief Investment Officer at Innovestor Group