Startup Otonomo Aims to Monetize Connected Car Data

author: Eric Walz   

As more and more connected cars are on the roads, the data generated by the vehicles is becoming more useful and valuable. Israeli startup Otonomo, which also has a Silicon Valley office in Menlo Park, California has been working on ways to monetize car data since its founding in 2015.

Otonomo is a cloud-based data exchange platform and enabling car manufacturers, drivers and service providers to be a part of a connected ecosystem. The company enables OEMs and fleet owners a new way of making use of the massive amount of car generated data by creating a marketplace that service providers and 3rd party applications can tap into.

Currently, Otonomo is working with nine automakers worldwide using its platform to feed a marketplace that connects car makers and drivers with service providers, optimizing the monetization of that data.

In April, Otonomo secured a new $25 million Series B funding round, provided by strategic investors and led by one of the world's largest automotive suppliers Delphi. The round also included participation from existing investors, including Bessemer Venture Partners, StageOne Ventures and Maniv Mobility, and will be used to help otonomo accelerate the pace of its global expansion plans.

Octonomo Raised $40 Million in Funding

With is new investments, the company now has $40 million in total funding, including investment from leading VCs and the former vice-chairman of GM Steve Girsky. The company's ability to land funding and customers, including Daimler, the only one of its nine automaker clients it is revealing publicly right now, can be linked to the growing appetite for vehicle driving data, according to Otonomo CEO and co-founder Ben Volkow.

Connected Cars

"There are more and more connected cars out there, and those connected cars are sending a lot of data in the background all the time to big databases the car manufacturers have built," Volkow explained. "They send the data between every minute to every three or four minutes depending on the model, and also when you start the car, when you park the car or when you have an event."

All this data is valuable to car makers, for their own use in developing new vehicles, services and technologies. However, it is also an additional cost to automkers.

"It costs a lot of money for the OEs; putting the modem in the car is like $100, then you have to pay AT&T about $5 per month to get the data out, then it's about $1 to store the data," Volkow said. "So we started talking to the car companies and they're telling us ‘Connectivity, it's a thing – show us the money.' That's what we do: We want to move from the age of data mobilization, to the age of data monetization."

How Otonomo's Platform Works

Otonomo's platform is a cloud based solution, with no additional hardware required in the car. The platform connects on one side to the databases of the car manufacturers, and on the other to different services and applications procure the data. The group of customers seeking the data includes insurance companies, smart cities, workshops, dealerships, developers, and even hedge funds – "everybody wants car data," as Volkow puts it.

Basically, the startup is helping car companies build new business from the data, and that's become a very lucrative proposition. It helps that selling data is around 100% margin, Volkow notes, while selling actual cars is a single digit margin game.

Possible Uses for the Data

Some examples of how businesses can use the data include insurance companies offering usage based insurance. Retailers can use car data as well. For example, if Starbucks knows you drive past a certain location everyday on your way home, they can send in-car advertising to entice you to stop in. Octomono hopes the data it collects will be highly valuable to third party companies in ways like this in the future.

Privacy Concerns

Volkow says there are a lot of regulations around use of this data coming, and Otonomo is proactive about working with them. He says his company makes sure in advance that the automakers are in compliance with local regulations, and that they also factor in the rules set out by car makers, the rules set out by app makers and service providers, and the permissions agreed to by drivers and tell the OEMs what they can safely do. Also, drivers will have the option to opt out of any data sharing using an app.

Regulation and increased restrictions around use and sharing of personal data might be Otonomo's biggest prospective roadblock. However, even with tighter controls and new regulations it seems likely automotive data will remain a boom industry for automakers and companies like Otonomo. Delphi's investment in Otonomo is a strong endorsement of this business model.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.