Autotech M&A

What Does Capstone Consider Autotech?

Capstone considers autotech companies as those that have a large technology component driving product/service offerings. Most of these autotech firms are laser-focused on software development. Disruptive companies are focused on capability as much as they are cost metrics. These firms are well positioned for autotech M&A.


Autotech Sector Investment and Exit

Thousands of early and late stage startups are currently trying to secure their position within “new mobility” as the industry transitions away from hardware and ICE vehicles and toward electrification and the software defined vehicle, more capable than ever in terms of efficiency and safety. Key areas that Capstone is focused on include:

  • Electric Vehicles
    Battery Electric Vehicles (BEVs) Motors & Powertrains
    EV Charging & Infrastructure
  • Autonomous Driving
    Cameras, LiDAR, and Radar
    Perception Software
    Processors and V2X
    Full Stack
  • Fleet Management and Connectivity
    Auto Cybersecurity
    Connectivity & Data Management
    Fleet Management
    Passenger Safety & Experience
  • Micromobility
  • Auto Commerce
    Digital Marketplaces, etc.
  • Freight
  • Last Mile Delivery

Each segment of the ecosystem consists of tens to hundreds of players competing for a market share. For example, the LiDAR industry is experiencing consolidation at a fast pace. There are roughly 120+ players, with only 3-5 expected to be major suppliers.

Autotech M&A is very active, and your business must be prepared to survive consolidation. Over the past two to three years, total autotech VC deal value is about $143B. The top three segments in terms of deal value in 2023 were the EV segment, followed by auto commerce and micromobility.

Let’s Talk Funding

We want to say first that Capstone has the utmost respect for founders and entrepreneurs trying to compete in the aforementioned autotech markets. It’s tough work and is both mentally and financially exhausting. Desired outcomes are anything but guaranteed. It’s very difficult for startups to precisely manage product development and market penetration alone, with the X factor being cash burn. Any mismanagement in terms of that cash burn to produce a minimal viable product (MVP) significantly increases the probability of failure. Investors, both financial and strategic, are looking at you and your team’s decision-making skills as much as they are the product or vision itself.

With that out of the way, let’s discuss autotech M&A and funding strategy. Most companies are at the center of the bell curve and follow the typical funding stages of pre-seed (less than $300K), seed (less than $6M), Series A, Series B, Series C and beyond. Capstone generally comes in at Series A to help scale the business when there’s a real product to sell, regardless of whether it is profitable or not yet. It’s critically important to know that when you get to Series A you need to have a product that’s completed or in MVP stage, with other forms of traction backing your funding requests.

Strategic Planning To Continue to Execute

Every founder believes their vision, product, and management team are fundable at a high valuation, which we commend. However, investors have extremely high opportunity costs with respect to capital deployment, and this fact, coupled with their perception of your ability to execute, makes it challenging to raise money. The fact of the matter is, every founder and even every management team has weaknesses. That’s where Capstone comes in as an advisor to help you secure your lifeblood: cash with minimal dilution.

While we’ve been in mobility investment banking since 1990, we’ve been covering autotech M&A since 2015 and have seen a lot in this short period of time. The way Capstone works well with our clients is by strategizing together and aligning on expectations. We are well versed on what does and doesn’t work in terms of funding for Series A and beyond, including what type of financial and non-financial traction financial and strategic investors are seeking, how they tend to perceive management’s ability to execute, and how management perceives go-to-market strategy. We are a performance fee-based advisory, so we can assure you that our interests are aligned with yours. Let’s talk in more detail!

I Need $15M-$20M to Start Generating Revenue!

This is a classic chicken or egg scenario that we hear all the time. Investors want traction/revenue to invest, while founders state they need $15M or more in funding to gain the traction or revenue. While there are cases in which the model virtually has a 90-degree turn upwards to go from a $0 run rate to a $100M+ revenue run rate, most autotech companies don’t have a revenue model that requires extremely large agreement volumes like this. As a matter of fact, almost every company besides an OEM or Tier 1 becomes instantly turned off when hearing this.

When we build a pitch to the market on behalf of our clients, our goal is to factually state there is market demand for your workable product, and that scaling the solution and the path to cash flow positive is defensible. While you ultimately have to pitch your company, Capstone guides you every step of the way to put you and your management team in the best position within autotech M&A to succeed to reach cash flow positive at critical mass, whether that’s 2,000+ customers or 10 customers.

I Want to Learn More About Capstone’s Thoughts On My Strategy

We love discussing strategy and lessons learned with later-stage startups. While nobody has all of the answers and differences of opinion exist, we thoroughly enjoy strategizing with you and your board to deliver the best outcomes possible in terms of autotech M&A. These conversations can be tough, but they are always in your best interest for success.


What is Autotech M&A?

Autotech M&A refers to merger and acquisition activities within the autotech industry, involving companies operating in automotive technology, electric vehicles, autonomous driving, connectivity, and related sectors.

Why is Autotech M&A significant?
Autotech M&A is significant because it drives industry consolidation, fosters innovation, facilitates strategic partnerships, accelerates market expansion, and enables companies to gain a competitive edge in the rapidly evolving automotive technology landscape.
What types of companies are involved in Autotech M&A?

Autotech M&A involves a range of companies, including startups specializing in electric vehicles, autonomous driving technology providers, connectivity platforms, software developers, sensor manufacturers, and other technology-driven automotive companies.

What are the common reasons for Autotech M&A deals?

Common reasons for autotech M&A deals include acquiring innovative technologies, expanding product portfolios, gaining market share, accessing new markets or customer segments, and enhancing R&D capabilities.

How does Autotech M&A impact industry trends?

Autotech M&A impacts industry trends by promoting technology integration, fostering collaboration, accelerating innovation, shaping industry standards, and driving the development and adoption of new automotive technologies.

What are the challenges involved in Autotech M&A?

Challenges in autotech M&A include valuation of technology-driven companies, intellectual property considerations, regulatory compliance, integration of diverse cultures and technologies, and managing talent retention.

How do companies attract Autotech M&A interest?

Companies can attract autotech M&A interest by demonstrating technological innovation, market potential, a strong intellectual property portfolio, proven business models, and a talented team with relevant expertise.

What is the typical process for Autotech M&A deals?

The process usually involves identifying potential targets or buyers, conducting due diligence, negotiating deal terms, obtaining regulatory approvals, integrating operations, and executing post-merger integration plans.

Are there any notable Autotech M&A deals?

Yes, there have been several notable autotech M&A deals, such as acquisitions of autonomous driving startups by traditional automakers, strategic partnerships between technology companies and automotive manufacturers, and consolidation among electric vehicle manufacturers.

What does the future hold for Autotech M&A?

The future of autotech M&A is expected to be dynamic, driven by ongoing technological advancements, market disruptions, changing consumer preferences, and the need for strategic alliances to navigate the rapidly evolving automotive technology landscape.