Automakers and technology companies are creating increasingly sophisticated digital platforms in future generations of cars and other vehicles. Today, a startup that has built a system to make it easier to connect this software and hardware to wireless networks has raised a major round of funding.
Cubic Telecomwhich provides a software-based networking solution for vehicles (and other devices) to connect to mobile phone networks in whatever country they are located, has raised 473 million euros ($513 million at today’s prices) from SoftBank Corp. SoftBank is taking a 51% stake in the Dublin-based startup, valuing it at just over $1 billion (€927 million).
This effectively makes Cubic Telecom a consolidated subsidiary of SoftBank. Barry Napier will remain CEO and hold a seat on the company’s board of directors. Daichi Nozaki, SoftBank’s SVP of global business, as well as two other SoftBank appointees (as yet unnamed) will join the board, with the remaining three board seats filled by existing Cubic Telecom investors, which include CARIAD (the Volkswagen Group) and Qualcomm.
The funding will be used to continue developing Cubic Telecom’s technology and business. Today, it has partnerships with 90 national and multinational mobile network operators and provides connectivity to 17 million+ vehicles in 190 countries and regions.
That’s only between 7% and 10% of the current market, Cubic Telecom COO Shane Sorohan said in an interview. (It may actually be slightly lower: Juniper research estimates that the number of connected vehicles on the market today is around 192 million.)
But the size of this particular round is driven by how fast the company is growing right now. Cubic Telecom currently connects 450,000 new vehicles – consumer cars, trucks and others – using its platform each month, and orders on the books are set to grow that figure “exponentially” over the next five years, the company said. Cubic Telecom cites forecasts from McKinsey, noting that about 95% of new vehicles will be sold with built-in wireless connectivity by 2030. Juniper puts the number of new cars on the road by then that will be “connected” at just under 400 million .
The growth of the industry is due to a number of factors: networks continue to improve, especially with 5G which is particularly suitable for IoT development. Cloud-based data services and the vehicles themselves are evolving further. and thanks to the evolution of other connected devices such as smartphones, watches, televisions and more, consumers and businesses expect more functionality in their vehicles.
To be clear, Cubic Telecom’s investment comes from SoftBank Corp. not SoftBank Group, nor the company’s famed Vision Fund, known – and occasionally infamous – for its outsized business deals.
In this case, the Japanese telecommunications and IT department in Tokyo is placing the money as a strategic investment.
The pair are working together in Japan, where Cubic Telecom is integrating SoftBank’s wireless network to provide connectivity to connected cars. And now, SBC sees an opportunity to expand internationally not through costly builds of more networks or by acquiring other providers, but by taking a stake in a partner it sees as gaining strong traction as an IT partner worldwide, precisely in this area where telco meets technology — a holy grail goal for carriers, especially these days as their networks become further commoditized.
Cubic plans to continue building more connectivity for vehicles, Sorohan said, but added that the company’s infrastructure and partnerships can work in a number of other industries, such as the agricultural industry, where national and multinational companies now use a variety of connected tools and autonomous equipment in remote areas.
Cubic Telecom’s business dates back to before connected cars were a big deal — in fact, it appeared in TechCrunch’s first Battlefield in 2007, when it focused more on helping consumers connect cellphones to international networks while roaming. However, it was its current focus on vehicles that fueled the business, attracting investment from the likes of Audi and Qualcomm.
The biggest gap in the market that the company is targeting and creating to plug in recent years has been that while technology companies and automakers have been working on ways to build more functionality into vehicles — whether it’s smarter ways to manage and respond to diagnostics of the vehicle or give you an easier way to listen to Spotify or help drive a car altogether — the part that’s remained the hardest is getting the internet connection to make it all work.
Typically, automakers would have to enter into agreements with individual carriers per region, which is time-consuming, expensive, and does nothing to create a seamless front-end experience for users. Cubic’s platform acts as a wholesale aggregator and essentially helps manage all of this automatically and at a lower cost, so that cars are delivered to a market ready to go, and if those cars are then driven to another region, they’ll still work. and there.
As vehicles continue to become more sophisticated, it’s only fair that technology companies and the automakers themselves find more seamless ways to manage this connectivity. Looking at what Apple and others are building with eSIMs is a sign of how there will be easier ways to provide services as easy as it is today for most people and businesses to install or uninstall software. For now, though, it’s the Cubic approach that helps keep the cost of building and running it down, and that gives it a key role for years to come.
“In line with our ‘Beyond Japan’ strategic development initiative, we are extremely pleased to partner with Cubic Telecom to make a full entry into the rapidly growing high-value IoT asset connectivity market,” said Junichi Miyakawa. Chairman & CEO of SoftBank Corp., in a statement.
