An example of a product by the Atlantium Technologies company, which aims to provide industry and municipalities with safe and sustainable water treatment solutions. The company has designed an innovative solution based on UV (ultra violet) disinfection, fiber-optics and hydraulics. It takes water safety to levels never before achieved with other UV systems or without chemicals. Aster first invested in 2013.

Disruptions will be in technologies AND in the business models

The missing link is still finance

Despite some inevitable failures, water remains attractive for business, and a sector that requires greater attention. Tremendous challenges are still ahead of us. Was it not the World Economic Forum in Davos which concluded that: “Water crises […] the greatest risk facing the global economy, outweighing the spread of infectious diseases, interstate conflict, energy price shocks and fiscal crises”? Hence, the challenges are not only about meeting the UN Sustainable Development Goals, water is also a significant and substantial issue for the industry, the utilities, and we can add the cities, the consumers, etc.

The Nuclear Paradox

Why now?

There is already a potential to create a new Direct-Energie every year”

2. Financial incentives for smaller players facilitate emergence of new offers

  • Bad-payers” costs — These costs are now partially supported by both energy retailers and distributors (vs. historically 100% supported by retailers)
  • Access to ARENH energy — Any retailer can have access to EDF nuclear energy at a fixed price of €42/MWh. This allows small retailers to hedge against market Spot price increase, which can show strong volatility (related to operating status of EDF nuclear plants or winter temperatures for instance). Used cleverly, the ARENH scheme provides a real security of supply for small retailers until they reach a critical size of approx. 50k meters. At that point, retailers are managing a large enough quantity of energy to efficiently forecast demand and plan purchasing strategy accordingly. ARENH access is limited to 100 TWh in cumulated volume. This is sizeable (20% of France total yearly consumption) and has historically always been undersubscribed by electricity retailers, even in periods when market prices were often above ARENH price.

Used cleverly, the ARENH scheme provides a real security of supply for small retailers, until they reach a critical size of ~50k meters”

A new competitive landscape — who will survive?

  • Development additional services should be a cultural mandate for all new entrants. These can include insurance products, boiler installation / maintenance, trusted intermediary (market place) for household energy efficiency investments (insulation, solar, smart thermostats, etc.) and other premium services. In addition to improving customer stickiness and generating actionable customer date for retailers (e.g., smart home devices), they should become a strong margin contributors and change electricity retailers “traditional” P&L.

Quickly reaching a critical size and effectively selling additional high-margin services are two “must-have accomplishments” for new entrants”

Within a 5 to 10-year period, successful new players will all be cheaper than Regulated Tariffs, and will differentiate from one another with alternative energy supply offers and/or innovative additional services.

Today’s competitive landscape and variety of offers show that the market has already reached an inflexion point that will ultimately lead to a more open and more diverse market offering where players will be constantly fighting for new customer acquisition through promotions and innovation. Incumbents will definitely have a role to play along the way by fostering (and sometimes even leading) innovation and leveraging their huge customer base.

As of today in Europe and the US, around 300 startups are active within the smart parking sector. By screening them it becomes clear that the key business model for start ups targeting services for on- and off- street parking is transaction fees based. A little analysis suggests that pure information/guidance and detection companies won’t be paid for these services in the near future.

In general theses products and services are aimed to minimize parking cruising and reduce traffic due to parking, while reducing OPEX & CAPEX expenditures for cities and increasing parking operators revenues. The market for on- and off- street parking is huge and amounts to around $30B each in Europe and the US, with two-third of the market being off-street parking revenues. The Chinese market is still nascent at around $1B but growing at around 30% per annum, whereas the US and European markets grow only by 1–3% per annum. The pure transaction based slice of that market — taking around 3–5% in transaction fees — will amount to approx. $2–3B in the coming years. Additional markets are Peer to Peer marketplaces and B2B analytic platforms for parking operators.

The smart parking sector can be categorized in transaction fees or B2B platform

In fact the smart parking sector can be categorized into six segments. The first four of them a) info, payment and booking b) e-payment c) on-street guidance and detection and d) Peer to Peer Parking (P2P) platforms make money based on transaction fees. The last two — valet and B2B analytic platforms — have a different business model. The trends of the various segments are outlined below.

Info, payment and booking for on- and off-street parking

Which player has the most parking spaces upon it’s platform? Here a race is occurring. The two largest global players are Inrix and Parkopedia. Both have started with on-street parking data/information and are now also including off-street parking info combined with payment and booking. Currently, automotive companies are willing to pay around 1–2$/year/car for integrating those services into the car infotainment subscription services. Assuming that around 200–300m connected cars will be on the streets within the next 5 years, the market size is relatively small. Therefore, and due to competitive forces, both players are now also including payment services to take transaction fees. This becomes especially interesting when “cars” will automatically pay for parking. Thus the trend is that in the near future pure info platforms will provide such data for free and all players will make $s by taking a transaction fee.

Pure e-payment focused companies for on- and off- street parking

Here, three players are already dominating the market i.e.: a) Easypark, majority owned by Verdane Capital, a private Equity company — potentially looking for an exit, b) PaybyPhone, acquired by Volkswagen AG in December 2016, with approx. $350m in gross revenues and c) Parkmobile, the US entity is owned by the Dutch business travel group BCD, the European entity is owned by BMW. Given the trend in the connected vehicles, these platforms are also including automated booking and information systems about parking, and as such will enter the space of the first segment.

On-street guidance and detection

In this segment, a small amount of startups are active: they crowd-source parking data through smart phone sensors, sometimes combined with dedicated hardware-based sensors, statistics and/or parking regulations/location information. This either feeds directly into their own proprietary apps and/or they provide a Software Development Kit (SDK) for other apps based on their data/algorithms. Making money on this services is not evident and those platforms need to pivot into transaction fees as well.

P2P platforms

This model is straightforward as these platforms are parking aggregators of private or business owned parkings to make them available/bookable for other individuals. All these platforms make money by taking a transaction fee. Here, scalability is key, i.e. getting as many parkings online for the lowest customer acquisition cost (CAC) per parking. Many startups are active and as such the sector is ready for a market consolidation.

Valet parking

Various startups were founded in this sector in the US during the last years. Almost all failed (Vatler, Caarbon and Luxe) or pivoted to a totally different area ( Zirx to Stratim). Only one “Valet Anywhere” is still active and offers valet services for monthly subscribers. All of them underestimated the relative high CAC combined with high cost for the valet man force, with very limited economies of scale (there are only 1–2 parking events one person can handle per hour) plus unpredictable demand. In addition, expected discounts with parking operators where not achieved as demand was highest during their peak hours. Often parking spots had to be prepaid regardless of usage. Similar Valet startups are “popping” up in Europe since 2015. We expect that the history as in the US will repeat itself. This segment just doesn’t scale unfortunately.

B2B, data analystics, SaaS

These startups are focusing to increase the yield of parking operators and/or provide parking information for e-payment providers. Especially the ones improving the yield of operators are promising as most are still using excel sheets or even more simpler models. A promising one out of the US in this segment is Smarking .

From an investor point of view, the interesting bets within key segments have already been taken. Interesting investments can still be made within the B2B analytic platforms business segment.

We can bet that autonomous cars, the rising of Artificial Intelligence and the Big Data’s revolution will change again the business model and generates new opportunities within the next few years.