SPAC listings break record for share sales in Jan., plus the companies to watch: AET Automotive & ZipDeal

Welcome to another edition of The Friday 5 with Steve Greenfield, Founder and CEO of Automotive Ventures, an auto technology advisory firm that helps entrepreneurs raise money and maximize the value of their companies.

We have a number of technology deals to announce on today’s show, so let’s get started.

2020 was the most profitable year in history for many dealerships across the country.

The National Automobile Dealers Association revealed this week that through the first 11 months of 2020 — December data is not yet available — the average U.S. dealership had net pretax profit of $1.8 million dollars, up 33 percent from the comparable period in 2019. That 11-month 2020 figure is already higher than the previous full-year record of $1.5 million dollars reported by NADA for 2015.

It’s great to see the industry experiencing record profitability, despite last year’s pandemic.

And the health the industry is seeing means the OEMs open up their war chests to drive innovation and R&D.

Woven Planet Holdings

Woven Planet Holdings, Toyota Motor Corporation’s high-tech spinoff, has established an $800 million dollar investment fund to cherry-pick up-and-coming technology companies around the world.

The fund, named Woven Capital, is lead by James Kuffner, and oversees two new companies, Woven Core and Woven Alpha.

Woven Core focuses on automated driving while Woven Alpha pioneers new businesses in fields such as connectivity, onboard software, and high-definition mapping.

Also under the umbrella is Woven Capital, with nearly $1 billion dollars that Toyota hopes to invest in cutting-edge technology it can channel into future products and innovation.

SPAC Deals

Greenfield proclaimed right here on the Friday Five that 2020 was the year of the special purpose acquisition corporation, or SPAC. And the good times continue to roll into 2021.

January was a record month for SPAC listings, which is helping power the busiest-ever start to a year for initial public offerings, or IPOs.

SPACs have completed nearly $26 billion of share sales in January, surpassing the previous monthly record set in October. That’s helped fuel the $63 billion of IPO fundraising worldwide this year, more than five times the proceeds from the same period a year earlier.

The rush of IPOs comes amid increasing signs that stock valuations are getting stretched. The S&P 500 Index is trading at 21.6 times projected earnings in the next year, more than a third above its 10-year average. At current valuations, stocks are sitting near their most expensive level since the year 2000.

And with that, we have a number of automotive SPAC deals that were announced this week.

CCC Information Services

First off, CCC Information Services is teaming up with SPAC Dragoneer Investment Group to go public in a deal that values the auto tech provider to car insurers at $6.5 billion dollars.

Chicago-based CCC’s technology allows policyholders of insurance companies to upload photos into a mobile app from an accident scene and, moments later, get a repair estimate via artificial intelligence.

The company counts more than 300 insurers, 25,000 collision-repair facilities, dozens of auto makers and thousands of parts suppliers as its clients. Its technology connects these parties to get claims handled and vehicles repaired after wrecks.

The 41-year-old business is majority-owned by private-equity firm Advent International.

REE Automotive

REE Automotive, an electric-vehicle technology startup, has agreed to go public through a merger with SPAC 10X Capital Venture Acquisition Corp.

The transaction includes a $300 million private investment in public equity, or PIPE, and gives the combined entity an enterprise value of about $3.1 billion.

REE makes technology to integrate all drive components into the arch of the wheel — and flat, modular chassis for autonomous delivery trucks, shuttles and robo taxis. The company says its platform can be used for battery or fuel cell-powered vehicles.

REE will supply crucial parts to EV makers that don’t have the full spectrum of components in-house. By outsourcing, they can bring models to market more quickly and at a fraction of the cost.

Otonomo

Israeli automotive data firm Otonomo will go public via SPAC at a valuation of $1.4 billion dollars.

The deal with SPAC Software Acquisition Group, is expected to fetch Otonomo $307 million in cash, including a $172.5 million private investment from investors such as Fidelity Investments and BNP Paribas Asset Management.

The combined company will be listed on Nasdaq under the symbol “OTMO”.

Otonomo sources data from over 20 million vehicles. Companies can use the data to develop apps and services for fleets, smart cities and individual consumers.

Otonomo’s partners include Daimler, Mitsubishi, BMW and Avis Budget Group.

Faraday Future

Electric vehicle manufacturer Faraday Future will go public through a merger with SPAC Property Solutions Acquisition Corp in a deal valuing the combined entity at $3.4 billion dollars.

The deal, supported by a private investment of $775 million, is expected to fetch Faraday Future $1 billion dollars in gross proceeds.

DealerPolicy

DealerPolicy announced a $30 million dollar round of Series B funding, which the company plans to use for developing its insurance marketplace serving the auto retail business as well as expanding its team.

The funding was led by 3L CAPITAL PARTNERS and Hudson Structured Capital Management.

CDK Global

CDK Global completed the acquisition of Austin-based Square Root. Founded in 2006, Square Root is the creator of CoEFFICIENT, which helps automotive OEM field managers understand and act on unique data patterns and opportunities for retailers in their markets.

The acquisition is viewed as an accelerator for Neuron, which CDK says can empower dealers and OEMs to sell and service more vehicles by helping them create more personalized and differentiated customer experiences.

Congratulations to Chris Taylor and the Square Root team!

Cresta

Porsche Ventures has completed an investment in Cresta, the real-time intelligence company for customer conversations, which specializes in messaging and voice communication.

Cresta’s software will be rolled out across Porsche Cars North America and Porsche Financial Services, online platforms to create a company-wide network that will enhance the customer support experience.

The first area to receive a Cresta-powered AI update will be Porsche Connect, a comprehensive suite of services and apps that supports the features of Porsche vehicles. A typical use case would be planning a long journey in the all-electric Taycan through the Charging Planner to calculate the fastest route, including the required charging stops. If the driver has a question, such as “How do I activate free charging at Electrify America stations?”, they will be able to benefit from a new chat function expected to launch in Porsche Connect on smartphones and laptops later this year. This will ensure immediate response and, if necessary, assistance by a service representative.

Verusen

BMW iVentures announced an investment in the Series A financing of Verusen, which provides an AI-driven inventory optimization solution to fuel the intelligent, connected supply chain.

The funds will be used to support the company’s seven-fold sales growth in 2020, including its global expansion and scaled delivery of its purpose-built AI, machine learning and neural network technologies to create the self-learning supply chain for customers in more than 25 countries.

Companies to Watch

Every week we highlight interesting companies in the automotive technology space to keep an eye on. If you read Greenfield’s monthly industry intel report, he showcases a few companies each month, and we take the opportunity here on the Friday Five to share some of those companies each week with you.

Today, we’ll look at two companies to watch, AET Automotive and ZipDeal.

AET Automotive

Our first company to watch, AET Automotive, allows dealerships to cut their agency & creative costs for paid, social & digital advertising.

AET Ad Studio is a self-serve ad tool that gives dealers the ability to create, customize, and launch directly into social platforms like Facebook, Instagram, & Snapchat — without any graphic design or media buying experience necessary.  The Ad Studio also supports multi image creation formats for dealer website banners & display ads

The AET platform allows dealers to dynamically update offer terms and expiration dates. Choose from their selection of professionally pre-written copy or craft your own custom tailored messaging to suit the needs of your dealership.

The AET self-serve platform allows dealers the freedom to create and deploy industry-leading automotive ads at the tap of a button.

Don’t want the headache of managing your social in-house? AET has you covered, upgrade to their full-service plan for an additional $349 per month and their highly trained team of automotive marketers will take control.

ZipDeal

Our second company to watch this week is ZipDeal, software that streamlines the post-sale, pre-F&I delivery experience by unifying the critical touchpoints that drive satisfaction and profitability.

ZipDeal helps combat the typical post-sale/ pre-F&I challenges that plague auto dealers everywhere — by providing a streamlined delivery system that engages the customer in the process early and keeps them engaged, eliminating the idle downtime that deteriorates customer satisfaction and dealer profitability.

ZipDeal’s delivery system does this by ensuring every customer is exposed to the critical touchpoints that drive a superior customer experience and increased profitability, 100% of the time. They accomplish this by giving control of this process to the party who benefits most – your customer.

ZIpDeal Create Additional Revenue Streams, increasing accessory, paint, & fabric sales by up to 25%. ZipDeal Increases F&I Profits, bringing a more informed, engaged, and satisfied customer into the F&I office. They also improve cash flow, by reducing time contracts are in transit and improves expedient funding.

ZipDeal improves customer satisfaction and tenure through a consistent and personalized delivery experience. Additionally, they ensure that dealers increase F&I Gross Profit by ensuring 100% of dealer’s Customers get an F&I Interview 100% of the time, and by speeding up and streamlining your delivery experience.

ZipDeal presents 100% of your products to 100% of your Customers 100% of the time, Guaranteed.

Did you miss last week’s episode of The Friday 5? Watch it here now! And don’t forget to share your questions and comments with us at newsroom@cbtnews.com.