$500M and 1.2B Cars: Cambridge Mobile Telematics Talks SoftBank Deal

Xconomy Boston — 

Ask Cambridge Mobile Telematics cofounder Hari Balakrishnan about the $500 million his business raised from SoftBank’s Vision Fund and he’ll bring up two bigger numbers: 1.2 billion and 875 million.

The first is an estimate of the number of vehicles globally. The second is the number of insurance policies on those vehicles.

Then there’s a smaller number: 50 million—Balakrishnan’s estimate for how many insurance policies cover vehicles that use a telematic, or vehicle data, system—like the one that his company makes—that tells the driver and the insurer how the policyholder is driving.

“It’s about getting to those 1.2 billion vehicles,” says Balakrishnan, who also serves as the company’s chairman and chief technology officer. “We want to bridge that, and we want to be front-and-center in this rapidly evolving mobility sector.”

Cambridge Mobile Telematics (CMT) yesterday announced Japan-based Softbank’s massive $100 billion growth-stage Vision Fund was investing $500 million into the driving-data company, whose DriveWell products are used by automotive and commercial insurers, companies with vehicle fleets, and also cities that promote safer driving through “safest driver” contests it runs with the Vision Zero traffic safety project.

The company appears to be the first Boston-area investment for the Vision Fund. So far, the private equity fund created by SoftBank Group CEO Masayoshi Son hasn’t cut a check smaller than $100 million. CMT says the investment is subject to regulatory approval.

CMT, which spun out of MIT’s Computer Science and Artificial Intelligence Lab in 2010, says it will use the new capital to further develop its products and pick up more customers. The company started 2018 with 40 employees and how has 70, with a number of job openings waiting to be filled in machine learning, data science, embedded systems, Internet of things, cloud infrastructure, and other areas.

Balakrishnan says the company has been successful on its growth path so far but has spent the past two years proving out its hypotheses about changing drivers’ behaviors by offering feedback.

That said, CMT’s current focus on improving both drivers’ safety habits and insurers’ loss ratios raises an important question: Why would a giant technology fund focused on “foundational platforms of the information revolution” invest half of a billion dollars into a company focused on human drivers when companies everywhere are heralding the age of the autonomous vehicle?

Balakrishnan says all the unanswered questions about crash liability, insurance, and safety will play out on his turf: telematics.

“That world can’t happen fast enough for us. That’s the world we want to be in,” he says. “At that point of time, all of insurance is a fundamental telematics play.”

Then insurance will no longer be governed by someone’s age, credit history, neighborhood; it’ll come down to the quality of the machine learning algorithms, the sensors, and the algorithms’ driving abilities.

“Anybody who believes that autonomous vehicles will magically eliminate all fatalities should also believe all software will be 100 percent perfect, sensors will be perfect, and machine learning algorithms will be infallible,” Balakrishnan says.

All “pretty significant assumptions,” he adds, calling to mind the weekly experience he has waving his hand under a water faucet sensor that always seems to take a few passes of his hand to start the flow of water.

So far, CMT has several million vehicles on its analytics system, Balakrishnan says, elaborating only by explaining the company shipped its 6-millionth in-car connected device earlier this year. But, he adds, not all CMT users have the device; many send data only from a smartphone.

The company lists as partners State Farm, Liberty Mutual, Desjardins, Discovery, Admiral, MS&AD Group, QBE, AIG, and Insurance Australia Group, and it says its products are used in 20 countries.