(Editor’s note: this is a guest post from Bo Ilsoe, an partner at investment firm Nokia Growth Partners (NGP). A couple of companies mentioned in the article are NGP investments.)

“I just want a car wrapped around my iOS experience”, quipped a blogger recently. “The millennials will not want to own a car,” said another and new terms such as being “Uberized” have entered into the vocabulary of investors and entrepreneurs alike.

At Nokia Growth Partners, we think about the ‘connected car’ as a wider movement and shift beyond the ability to get your smartphone content in the car or getting over the air updates of your navigation system, to a reshaping of personal mobility.

In that light, the rapidly increasing valuations of platforms such as Uber can be understood. As is typical across other shifts enabled by technology, US companies have garnered much media attention and much capital. But what is going on in Europe?

While Europe is home to some of the most successful automotive companies globally such as VW, BMW, Daimler and Jaguar Land Rover, investor interest in the connected car domain has lagged behind that of the US. However, during the last year we have seen investment activity pick up significantly and deal sizes have increased, examples of that are companies like BlaBlaCar, Drivy, GoEuro, GetTaxi, and the NGP-lead $50 million investment in Moovit, as well as the successful initial public offering of Mobileye.

European entrepreneurial activity now has such momentum that a Berlin-based entrepreneur recently lamented that the amount of ride-sharing, car sharing, car rental, bike-sharing and taxi hailing schemes that have popped up necessitate an aggregator to make sense of it all for the consumer!

In parallel, the major European automotive OEMs are actively developing, adopting and scouting for new connected car technologies. With this activity, a flood of conferences and media interest has followed and the whole scene is becoming more diverse and more interesting.

Let’s take a look at some of the market-specific strengths of the European connected car sector and what it could mean for European entrepreneurs over the next five to ten years.

Emerging Connected Car innovation areas in Europe

A new paradigm for the transport ecosystem: Europe has old and dense cities, a very well-developed public transport infrastructure but is also very fragmented. These characteristics have given rise to a strong European breed of companies simplifying consumers’ journey challenges. Services such as GoEuro and Moovit help simplify search, booking and planning your journey across a plethora of transport options, countries, operators, ticketing systems, pricing schedules and languages.

Ride-sharing through the Internet was pioneered by students in Europe in the early 2000’s as the connected infrastructure, shorter distances and population density of continental Europe lends itself well to this service. This was the precursor to the success and large financing of BlaBlaCar and more recently Drivy.

Hailo and Gett (formerly GetTaxi) were early entrants in the London taxi hailing market and is now battling with San Francisco originated Uber who (backed by successive massive fundraising rounds) seem set to become the dominant platform in Europe as well. Car fleet sharing pioneered in equal measure on both sides of the Atlantic rose rapidly and both Daimler and BMW quickly made acquisitions in the space (Car2Go and DriveNow).

The next challenge is cracking the peer-to-peer sharing of cars where private individuals avail their own car to strangers. GoMore and WunderCar among others are having a go at this in Europe.

Parking is another major headache and estimates are that some 20-25% of inner city traffic load are from drivers searching for parking lots.

Finding, booking and sharing car park space efficiently is yet one more piece of the transport ecosystem puzzle being solved by new innovation. Cycling, long a preferred means of urban transport in parts of Europe, is on a rapid rise; the “Boris bike” of London was not the first city funded cycle-sharing scheme in Europe, but certainly garnered much PR attention as the colourful, bike helmet clad, Mayor of London Boris Johnson has led the way for an explosion of these schemes across the continent and in other parts of the world.

The bicycle was not exactly a beacon of high tech in the past, but as always entrepreneurs such as the team at Lock8 in Berlin, are hard at work making your bicycle smarter, more connected and shareable.

Assisted driving functions as a precursor to autonomous driving are developing fast.

Clearly Google has stolen the PR thunder, whereas the European OEMs in a typically humble fashion have made a lot of progress under the radar. They have come realize that they also need to step up the PR efforts. We have witnessed Mercedes showcasing their first automotive drive vehicle with navigation powered by HERE (a Nokia company) already years ago, Audi and Volkswagen have joined the fray and started to test self-driving cars on roads in California and BMW demonstrated self parking cars at CES.

All of these developments leave plenty of scope for innovation; Creating live high definition 3D maps, locating vehicles with centimeter precision on roads, and cost effective real time 3D imaging are just a few of the problems that need to be tackled by new innovation.

Europe and Israel remain hotbeds for the best computer vision and image recognition technologies globally, and Mobileye has demonstrated the strength of this sector in Europe and Israel.

Another area of focus is infotainment. We are seeing increased efforts on technologies like voice recognition, voice control, and audio and music streaming. These services can be tailored and enhanced for use in the car; listening to your e-mails while commuting, or listening to streaming music and audio books, pioneered by Aupeo out of Berlin, are just a couple of examples of services enhancing the driver experience.

The MP3 algorithm, the codec for delivering many of these services was originally developed by the Fraunhofer Institute in Germany. Evidently all cars need to support connectivity to Android and iOS, however, automotive OEMs are vary of allowing Android Auto and Apple CarPlay to penetrate deeply to the overall user experience in the car.

New user interface solutions and connected consumer services are expected to grow faster than for example autonomous driving technologies because these are areas where we can take elements from the online and smartphone world directly and place them into cars.

Mixed reality experiences are powered in a variety of applications by Munich-based Metaio; Canatu in Espoo, Finland is developing new carbon-based films that can enable touch sensitive materials in any shape; and heads up displays are being reengineered by Lausanne, Switzerland-based Lemoptix that was recently acquired by Intel – to mention just a few of the European innovators that are defining a whole new user interface paradigm in the car.

Entrepreneurs will have opportunities to work closely with automotive OEMs in developing new solutions, but will also have opportunities to build “Over The Top”, OTT services into cars independently through devices such as Vimcar out of Berlin or Zubie, also funded by Nokia Growth Partners.

In short, it is our expectation that Europe will be leading the way in many part of the connected car development, in particular when it comes to integrating all various transport options and pioneer the reengineering of the transport ecosystem.

ADAS pre-cursors such as lane assist and adaptive cruise control are already in cars from European OEMs and HERE is pioneering high definition 3D maps as well.

An early market evolving fast

At Nokia Growth Partners, our investment focus in the connected car landscape varies across our regions, but as always in the world of technology, business models and inventions travel fast, enabling us to learn and cross-pollinate ideas between China, US, Europe and India.

Although the connected car represents a large opportunity for growth, the basic objective to serve safe and secure consumer transportation remains paramount for all players. Our online world cannot be imposed in all its facets in an automotive environment, however, the exciting opportunity is for new and innovative companies to “translate” online experiences into compelling and useful services in our cars as well as drive mobile real-time services to consumers for a more efficient transport system.

We are very excited about the Connected Car movement. It is at the beginning of a long journey, making our cars smarter, our travel more comfortable and transport overall more efficient.

Also read:

10 European tech startups driving change in the automotive industry

BlaBlaCar raises $200 million in Series D funding at a $1.6 billion valuation

Nokia’s digital mapping business HERE bought by BMW, Daimler and Audi for €2.8 billion

A look behind the scenes of the bidding war for location-based services

Apple is expanding its R&D center in Sweden to work on ‘advanced mapping technology’

Featured image credit: Syda Productions / Shutterstock