Filling holes on the road to autonomous vehicles – Part 1: what are non-automotive corporate VCs up to?

Varun Jain, early stage investor at Qualcomm Ventures (interviewed below) will lead a session on ‘Holes on the road to autonomy and how to fill them’ at the December 1st GCV conference ‘Venturing and the Future of Mobility and Automotive Technology’. In addition to Qualcomm Ventures, the corporate VCs interviewed for this article are Nokia Growth Partners, Caterpillar Ventures and Pangaea Ventures (a multi-corporate VC). Their automotive investments include:  

Qualcomm Ventures Nokia Growth Partners Caterpillar Ventures Pangaea Ventures
Cruise Automation (acquired by GM), Navdy, Flirtey

 

Drivy, Zoomcar, Moovit, Peloton TriLumina, Clearpath Robotics Envia Systems, Switch Materials, Airborne

One of the most exciting developments in the automotive industry today is the increasing investment activity of corporate VCs from outside the traditional automotive industry. They bring a fresh perspective, one that is perhaps more open to disruptive technologies and business models. They also bring different skill sets, while increasing the overall pool of available capital, enabling faster development of more start-ups than was hitherto possible, particularly given the dearth of exits in the auto-tech until quite recently.

Right now the whole transportation value chain is up for grabs. I can’t say whether our transportation needs in five years will be met by a company today seen as software giant or whether the incumbent OEMs will hold on. Neither can the incumbent OEMs or software giants, which is why they’re all busy venturing to survive and prosper. And they might both be muscled off the road by newcomers. Who knows?

In the summer, the Finnish capital of Helsinki has a tram converted to a fully functioning mobile bar. This meets both the transport and refreshment needs of its passengers. I look forward to the day when bars and cafés will be synonymous with autonomous vehicles. What could be better than commuting in a safe mobile bar which serves your favourite coffee on the way to work and then your favourite wine or beer on the way home (not every evening of course, just Fridays).

Nokia Growth Partners’ 2016 investment in the $275m series E round of Deliveroo, the online food delivery platform, give us a sense of how close my personal transportation hopes may be to reality.

Commenting on NGP’s investment in Deliveroo, Paul Asel, its managing partner, says: “Last-mile delivery is an area that comes from the enhanced intelligence stemming from the convergence of cloud, mobile and sensors technologies.” The same factors are at play in the last mile delivery of the human. So maybe Deliveroo or its competitors will soon compete with Uber and its competitors? After all, Uber has already diversified into food delivery.

Nokia is a company not typically associated with transport, but through its Connected Car fund Paul Asel says it is investing “in the transformation of the transportation industry as a whole. For example, we believe that private transportation will migrate toward a shared model improving affordability, allowing consumers to drive better cars by increasing utilization rates, which are about 10%.”

He adds: “Our investments in car sharing companies include Drivy in Europe and Zoomcar in India. In public transportation, we have invested in Moovit, which is improving traffic congestion and intra-city travel through smarter use of public transportation. In the trucking sector we invested in Peloton, which is a semi-autonomous driving solution, which allows trucks to pair up and drive closer together, thus saving 10% of fuel costs. These are just a few examples of the range of innovation and opportunity across the transportation sector.”

Asel sees car sharing becoming far more widespread once “trust improves through visibility into driving behaviour.”

Visibility into driving behaviour is a key interest for Qualcomm Ventures, another corporate VC not typically associated with transportation, but which like Nokia, is very active. Qualcomm Ventures was an early investor in Cruise Automation, the autonomous vehicle business acquired by GM for $1bn in March 2016, probably the most impressive exit in this space so far. What automotive venture opportunities does Qualcomm Ventures seek?

“As far as automotive is concerned, we are investing in two types of opportunities,” explains Qualcomm Ventures’ Varun Jain. “Firstly, aftermarket next-gen devices and cloud services that democratize access to premium advanced safety, connectivity or fuel-saving features in existing vehicles.”

“Secondly, companies that are either building fully autonomous vehicles (for instance, cars, trucks, shuttles, delivery bots) or focusing on a particular part of the autonomy software stack (say perception or localization) and productizing it as a service that can be used by others.” Varun Jain has a neat definition of the autonomous vehicle. “A self-driving car at its core is a machine-learning application on steroids.”

So the question is who has the steroids and are they legal?

According to Jain, Cruise Automation was backed by Qualcomm Ventures precisely because it had demonstrated advanced capabilities in “hyper-congested city traffic where these vehicles are finally supposed to operate and not just in closed parking lots.”, What’s more, Jain deemed the company highly relevant even without a major legal overhaul in the regulations governing autonomous vehicles. “[Cruise is] of tremendous value even if the regulatory framework doesn’t evolve as quickly as we hope,” he adds.

Andrew Haughian, partner at Pangaea Ventures, the Vancouver-based multi-corporate VC specialising in advanced materials, is also looking for all-weather autonomous vehicle technologies.

“LIDAR-based systems are required in order to enable true autonomy,” says Haughian. “Most parts of the world face much more difficult weather and driving conditions than testers face in Silicon Valley. The performance needs to improve, while the footprint and most importantly cost of the laser and detector systems need to be reduced.”

Haughian sees materials technologies as “vital in achieving these goals … for example high new advances in nitride-based materials and devices are important for advances in laser cost and performance. Silicon is a poor absorber of infrared light and therefore current image sensors are not adequate in more challenging driving conditions with low light.”

Many of the major OEMs have set themselves deadlines for their commercial introduction of fully autonomous passenger vehicles; Tesla by 2018, Toyota by 2020, BMW by 2021 (in China), Nissan by 2020, Ford by 2021, Baidu by 2018, Honda by 2020. (These goals are also no doubt subject to regulatory progress in respective markets). But if we look at industrial transportation, the timelines are much shorter. In fact, autonomous vehicles already here.

“Many people may not know this, but Caterpillar is a leader in the autonomous vehicle space,” says Brian Lowry, Investment Manager at Caterpillar Ventures. “Automotive companies get a lot of press for autonomy development, but we have fully autonomous mining trucks running in production in mines right now,” he adds.

TriLumina and Clearpath Robotics are both recent investments from Caterpillar Ventures. TriLumina is a LiDAR technology company focused on the autonomous vehicle space. Clearpath is a Canada-based manufacturer of unmanned vehicles for industrial research and development applications.

“Caterpillar is continuing to develop in this space to create semi and fully-autonomous machine systems that will lead to greater efficiency and improved safety for our customers and their operators,” says Lowry.

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