Investors are eyeing consumer startups
2023.02.01 02:58
Investors are eyeing consumer startups
By Ray Johnson
Budrigannews.com – Investors are continuing to fund startups that target simpler self-driving vehicle solutions far removed from pedestrians and other vehicles operated by unpredictable humans, despite the fact that developing fully autonomous vehicles (AVs) that are able to travel anywhere has proven harder and more expensive than anticipated.
Companies like British supplier Aurrigo International Plc, Sweden’s Einride, America’s Outrider, and British AV software company Oxbotica are among those attracting investor interest with more targeted approaches that target simpler, smaller customer segments like mining vehicles or forklifts.
According to Kasper Sage, managing partner of BMW’s venture capital fund BMW iVentures, which led autonomous forklift company Fox Robotics’ $20 million funding round in October, investors are looking for startups that burn less cash and are preferably already generating revenue after watching robotaxi firms spend billions on technology that could still be many years away.
Sage stated, “Full autonomy in any environment is still years, if not decades away.” An effective business case is required, and the issue must be reduced.
The earlier promises made by robotaxi companies to operate vehicle fleets by the beginning of the 2020s have not been met. Ford Motor Company (NYSE:) Volkswagen AG and the company In November, Ford CEO Jim Farley announced that the self-driving vehicle Argo AI had been terminated and that a profitable robotaxi business was still many years away. General Motors Co., a rival of Ford, (NYSE:) cruise’s robotaxi unit spent nearly $2 billion last year, and the company said it plans to spend even more in 2023.
The issue is that it is extremely difficult to create robot cars that can drive more safely than humans. This is due to the fact that AV systems still lack humans’ ability to quickly anticipate and evaluate risk, particularly in the event of an unexpected incident.
In 2021, investors shifted their attention away from robotaxis and toward self-driving truck companies, which promised a faster route to market by hauling freight autonomously. They argued that it would be simpler to develop AVs that could operate at high speeds on highways without pedestrians.
However, these startups have also struggled to meet expectations due to the fact that even a fast-moving robot cannot match the human brain.
For example, the AV truck technology company Aurora has a market value of $2 billion, which is a small amount compared to the $12.5 billion it was worth when it went public in 2021 through a special-purpose acquisition company (SPAC).
Investors have returned to basics in response to the long-term conundrum that humans and robots do not get along well. They are focusing on less complicated, less expensive forms of autonomy that have a clearer path to payback and operate at lower speeds with little to no traffic.
Kodiak Robotics, a company that develops AV truck technology, is another company that BMW iVentures has invested in. Kodiak Robotics’ managing partner Sage stated that the company has adopted a simpler strategy in areas like mapping.
Kodiak was awarded a $50 million contract in October to create AVs for the US Army.
Don Burnette, CEO of Kodiak, stated, “It helps that we’re not spending a ton of money, like some people have.”
According to PitchBook senior analyst Jonathan Geurkink, overall venture investment in AV companies fell 47% to $1.4 billion in the fourth quarter compared to the same period last year.
However, $500 million went to Einride, an AV electric truck company that is working toward operating self-driving trucks on public roads but has initially focused on less congested private roads at customers like GE Appliances, a unit of Chinese home appliance manufacturer Haier.
According to Asad Hussain, a research partner at the private equity firm Mobility Impact Partners, “The shift in investment… toward off-road/more structured environments is a very real one given the lack of progress in passenger AVs (and) the high capital requirements involved.”
Oxbotica, a British software startup, recently announced that it would receive $140 million in funding to launch additional products, beginning with autonomous vehicles (AVs) that can operate in remote areas and mines.
Oxbotica CEO Gavin Jackson stated, “We’re really focused on’somewhere’ autonomy rather than ‘everywhere’ autonomy because that’s where the value is today.”
According to Jamie Vollbracht, a founding partner of IP Group Plc’s $450 million clean-tech investment platform Kiko Ventures, mining companies can lose millions of dollars per hour in remote areas if they are unable to get a human driver into a truck, making them one of the growing number of viable markets for AVs. Oxbotica’s first institutional investor was Kiko.
Vollbracht stated:
“There has been a significant underestimation of the scale of those early (AV) applications.”
In January, the American startup Outrider announced that it would receive $73 million in funding to expand its fleet of self-driving trucks, which are currently moving at a snail’s pace through customers’ distribution yards.
Another area of expansion for AV startups has been agricultural and construction equipment, which is used off-road in areas with low traffic. They are competing with established manufacturers of heavy equipment, such as Caterpillar Inc. (NYSE:), And Deere (NYSE:) CNH Industrial and Co (NYSE:) NV, which has additionally put money into AV technology.
Apex, Oxbotica, like According to CEO Jan Becker, AI creates AV software for a wide range of vehicles and “a number of non-automotive and trucking customers (with) a wide range of applications.”
For instance, the Palo Alto, California-based startup is implementing the software for an experimental automated electric planter for AGCO Corp, a manufacturer of agricultural equipment in the United States.
As it moves toward autonomy, Deere has already purchased a number of AV-related businesses, including the self-driving tractor company Bear Flag Robotics for $250 million in 2021.
Before Bear Flag was sold, Trucks Venture Capital, based in San Francisco, had invested in the company. Managing partner Reilly Brennan stated that the company is “actively looking for another autonomous ag (startup)”
Teleo, a manufacturer of semi-autonomous retrofits for heavy construction and mining equipment, has also received funding from Trucks Venture Capital. In June, the company announced that it had raised $12 million.
The Teleo system lets a human operator remotely control multiple slow-moving AVs and only take over when the software can’t. According to CEO Vinay Shet, Teleo was able to “build a real product that we can take to market today and not wait for another decade or two” by combining the best AV software with human intelligence.
