Tech startups in the automotive industry and mobility space are phenomenal at innovating but terrible at scaling up their operations, Quin Garcia, co-founder and managing director of Silicon Valley venture capital firm Autotech Ventures, said Friday at the Automotive News Congress in Los Angeles.

During a wide-ranging discussion about venture capital-backed startups partnering with established players in the automotive and transportation industries, Garcia said that in contrast, those companies can scale but are slower at innovation.

“People who have been there, done that, pair them up to try to solve transportation, automotive problems with tech,” he said.

When evaluating early-stage startups to invest in in the automotive, smart mobility and transportation sectors, consider that companies with a mix of technical, creative and marketing expertise work best, said Amazon Web Services’ principal for startups, Angel Gambino.

“You never really know until it works out; the business of early-stage startups is risk, it’s a game of risk,” Gambino said. “For me, the team is most important.”

Gambino and Garcia agreed that the entry of tech giants such as Amazon, Apple and Google into the automotive and transportation industries and the creation of Tesla have pushed long-established companies to partner with innovative startups.

That started about 10 years ago, Garcia said.

“Prior to that, there had been little penetration of tech into automotive; it was fairly closed to outside innovation; there was a lot of internal R&D; folks were printing money for the most part; it had its ups and downs,” Garcia said. “And then the tech sector was looking for their next trillion-dollar market, and the largest sector in the world is transportation.”

Gambino added that industries outside tech and automotive are now also looking at smart mobility, including real estate, property tech and insurance.

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