Battery Ventures’ journey into fleet management software began with the purchase of a pair of firms with “complementary” offerings but which leave room for extra functionality, partner Zak Ewen told PE Hub Europe.
Vimcar and Avrios entered the Battery portfolio earlier this month. Battery made a combined €200 million investment, PE Hub Europe understands, with management still involved in both firms. Vimcar and Avrios were cashflow positive at the end of 2022, having been founded in 2013 and 2015, respectively.
“It’s a good example of a majority growth investment where we’re able to buy a controlling stake in two nicely growing businesses, both backed by a tonne of great venture capitalists, but looking to take the business forward as a combined entity and pursue more M&A,” said Ewen. “We can wear both hats because we are a venture capital firm, but we’re also private equity firm.”
Battery is investing its 14th family of funds, Battery XIV and a companion fund, which have a combined capitalisation of $3.3 billion. Battery established its London office in 2016, and it also has offices in Boston, San Francisco, Menlo Park, New York and Tel Aviv.
Battery “got lucky” as the timing aligned to buy the businesses, in a move that Ewen said “all went back to being a bit more creative around ways to deploy capital than maybe you had to be in 2020 to 2021”. You can read more on Ewen’s thoughts around the wider European private equity market here.
With the firms’ largest footprint in DACH – Vimcar is headquartered in Berlin and Avrios in Zurich – and some international business in Italy and the UK, Battery plans to create a “pan-European champion” as the first leg of its plan, said Ewen.
The firms together have over 250 employees and tens of thousands of customers in construction, technical field services, healthcare, manufacturing, government and other industries.
“Vehicles are a fact of life for those businesses and they need software to manage what’s become a pretty big and complex cost,” said Ewen. “You have to know that your drivers are compliant. You have to manage fines, you have to manage damages and repairs, insurance policies, end of life for leases. The minute you have 10, 20, 30 plus vehicles, which is not huge in the grand scheme of things, it starts to get pretty complicated.”
Adding to that complexity is the changing nature of fleet and mobility. Firms now provide employees with scooters and bikes rather than cars, or offer carpooling. Electrification of fleets also adds new requirements, for example: “[If] there’s not an electric charging station within a certain radius of that job site, or I can’t send this electrical vehicle to the repair shop that we typically use because they don’t service electric vehicles, things like that,” said Ewen.
The Vimcar and Avrios software allows fleet managers to record all these factors – replacing in many cases paper or Excel systems – Ewen said, with the two systems being “very complementary”.
“They don’t have overlapping or competing products and already have shared customers,” he added. “The goal is to accelerate, to get more customers using more of the product portfolio, but also bring in businesses that are doing similar things in new geographies.”
The door is also open for acquisitions that add functionality.
“There are areas they don’t cover today that are natural pain points for fleet managers,” said Ewen. “And the data they have is super compelling, managing over a quarter of million of vehicles, so they have data on all these companies. They know mileage, usage, they can track repairs, damages, fines etc. We think that data ecosystem is a natural starting point to bring in new technology that we can also sell back to our customers in terms of benchmarking best-in-class use cases on how to manage fleets, fleet costs, who are the right suppliers to work with, leasing providers and insurance providers, etc.”
Battery is not alone at looking at this area. Carlyle, for instance, agreed to sign a majority stake in Groupe Lacour, a French software provider for automotive after-sales value chain, last week.