Maine-based Wex is making significant strides in the electric vehicle (EV) market, announcing the launch of Wex Venture Capital, a new investment firm with a commitment to invest $100 million in startups through 2025. This move demonstrates the resilience of corporate venture funding, despite a slump among traditional venture investors.
Wex, with a market capitalization of over $8 billion, primarily generates revenue through managing vehicle fleets and issuing fuel cards. However, the company has been actively transitioning towards electric vehicles for nearly two years, responding to a growing global fleet of 18.7 million vehicles. Rising consumer demand for greener alternatives and an abundance of promising green tech companies are driving this strategic shift.
The decision to establish Wex Venture Capital comes at a time when corporate-backed venture agreements worldwide fell by only 2% in 2022, in contrast to the broader venture funding landscape, which experienced a 25% decline. The year 2022 saw record numbers of new corporate investment units launched and unprecedented corporate participation in startup deals, according to data provider Global Corporate Venturing.
Wex's newly-formed investment firm has already made its initial investments, supporting two promising EV-related startups: Chargetrip, an EV routing and range prediction company, and ev.energy, a charging software startup. Moving forward, the firm aims to focus on early-stage companies specializing in EV routing, energy management, and charging infrastructure.
According to BloombergNEF, the global market for electric vehicles has tremendous potential, with sales expected to more than double by 2026 as a result of declining costs and an expanding selection of models. This exponential growth has attracted a surge of interest from venture capitalists, with over $4.1 billion invested in the sector across 178 deals in 2021, according to PitchBook data.
Jay Dearborn, Wex's Chief Strategy Officer, emphasized that the company's commitment to EV startups is not solely based on financial gains. Instead, the company is investing for strategic advantage, aligning with the long-term vision of a global transition towards sustainable transportation.
David Klein, who joined Wex last year after leaving his design startup, Parade, will lead the new investment firm. Reporting to Klein will be Dearborn and Wex Chief Operating Officer Carlos Carriedo.
Wex's move to invest in EV startups showcases the growing importance of sustainable technologies and highlights how major players in various industries are recognizing the significance of greener alternatives.
With Wex Venture Capital's commitment to supporting early-stage EV companies, it is poised to play a crucial role in driving innovation and accelerating the global adoption of electric vehicles in the years to come. As the world moves towards a more sustainable future, such investments hold the potential to transform the automotive industry and contribute significantly to combating climate change.