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Space is the next economic frontier… hear more about it at Disrupt SF
For decades space has been the play place for world powers, but the advent of (relatively) cheap and frequent rocket launches has opened it up for new business opportunities. But it’s still hard as hell, as early adopters of this orbital economy Tess Hatch of Bessemer Ventures, Swarm’s Sara Spangelo and OneWeb’s Adrian Steckel can attest. They’ll be on the Extra Crunch stage at Disrupt SF 2019 on October 3rd at 1:40 PM.
Spangelo and Steckel are in the midst of launching what have been termed “mega-constellations,” collections of hundreds or thousands of satellites offering a coordinated service (in their cases, global connectivity). These efforts are only possible with the new launch economy, and came hot on its heels, showing there’s no reason to wait to put new plans in action.
But such constellations bring their own challenges. Just from an orbital logistics point of view, launching a single satellite so that it enters a unique and predictable trajectory is hard enough; launching a dozen or a hundred at once is more difficult by far. And after launch, how will those satellites be tracked? How will they communicate to the surface and each other? What about the growing risk of collisions?
On top of that are more terrestrial, but no less crucial, questions: What services can be made available from orbit? What’s a reasonable amount to spend on them? How will they compete with and accommodate one another? Whose regulations will they follow?
These latter questions are among those that must also be answered by investors like Hatch, who is familiar with both the technical and capital side of the burgeoning space industry (and of course the technical side of the capital side). Space ventures can be extremely expensive and high-risk, but to get your foot in the door at this stage could be the start of a billion-dollar advantage a couple of years down the line.
If you’re planning on getting involved with the new space economy, or are just curious about it, join us for an extended discussion and Q&A on the 3rd.
Disrupt SF runs October 2 to October 4 at the Moscone Center in San Francisco. Tickets are available here, and they just happen to be available at a discount today only.
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24-hour Friday flashback on Disrupt SF passes
We here at TechCrunch love a good flashback, like when Sebastian Thrun’s puppy, Charlie, was in the spotlight during Thrun’s fireside chat at Disrupt SF a few years ago.
Sebastian Thrun (Udacity) at TechCrunch Disrupt SF 2017
Since then, the serial entrepreneur and inventor seems to have doubled down on his vision of the future of transportation with his current flying car company, Kitty Hawk Corporation. Thrun is working on bringing two aircraft to market — the one-person Flyer and a two-person autonomous taxi called Cora. He (along with a stellar lineup of startup leaders) will be at Disrupt SF this year to give a behind the scenes look at Kitty Hawk and what the future of flight might look like.
In this same vein, we’re doing our own Flashback Friday by rolling back to early-bird prices for Disrupt SF. For today only, you’ll have the chance to save up to $1,300 on your pass, with even bigger savings when you bring your whole team along for the ride. Need more reasons to attend? We’ll give you five.
The excitement of Disrupt SF begins in just a few short weeks — don’t let this chance to attend the largest startup conference in Silicon Valley pass you by — register today. Who knows, we might even have a chance to see Charlie return to the limelight.
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Boston gets a new biotech accelerator with the launch of Petri
As biotechnology becomes more central to new innovations in healthcare, material science and manufacturing, one of the nation’s research hubs is getting a new accelerator called Petri to launch companies focused on the commercialization of new technologies.
Backed by the Boston-based venture capital firm Pillar, Petri has a three-year $15 million commitment to back companies developing new biotech applications in food, healthcare, industrial chemicals and new materials — along with the enabling technologies to bring these products to market.
“We’re at the inflection point where these technologies will impact and continue to impact health but will also impact food, agriculture, chemicals and materials,” says Petri co-founder, Tony Kulesa. “Everything we touch has some element of biology.”
Pillar has already invested in a couple of companies that show the potential promise of new biotech research coming from Boston-based universities, like Boston University, Harvard and the Massachusetts Institute of Technology.
Asimov,io, a company that has set an ultimate goal of designing new genomes for industrial applications, was co-founded by graduates from Boston University and MIT, and is a part of the Pillar portfolio. PathAi, a company working on enabling technologies for computational biology, also counts an MIT grad as a co-founder. Meanwhile, Harvard’s George Church has been instrumental in the development of a number of biotech companies working at the frontier of genetic applications for healthcare and manufacturing.
As an instructor at MIT, Kulesa spent seven years at MIT watching, in his words, how engineering has transformed biology. “It became clear to me that these technologies need to get out in the world,” he said.
Joining Kulesa as a managing director is Brian Baynes, a serial entrepreneur who founded Midori Health, an animal nutrition startup; Kaleido Biosciences, a microbiome control focused company; Celexion, a protein engineering and synthetic biology company; and Codon Devices, a synthetic biology toolkit company which was sold to Ginkgo Bioworks .
Over time, Kulesa and Baynes expect to have 10 to 20 companies in each cohort as the program expands. In addition to checks of at least $250,000 the Petri accelerator has lab and office space available for each company.
The companies also could benefit from potential partnerships with companies like Ginkgo Bioworks, which happens to share office space in the same building, and with the accelerator’s clutch of big-name advisors and “co-founders” recruited from across the life sciences industry.
These co-founders, who collectively hold a double-digit equity stake in Petri’s accelerator, include Reshma Shetty, from Ginkgo Bioworks; Emily Leproust of Twist Bioscience; Stan Lapidus, who was at Exact Sciences and Cytyc; Daphne Koller, the co-founder and chief executive of Insitro; Alec Nielsen, the founder Asimov; and researchers Chris Voigt of MIT and Pam Silver and George Church from Harvard’s Wyss Institute.
Genetically engineered organisms are finding their way into everything from food to fuel to chemistry. Companies like Impossible Foods, which uses genetically modified soy product, has raised hundreds of millions for its protein replacement, while Solugen, a manufacturer of chemicals using genetically modified organisms, has raised tens of millions to commercialize its technology. And Ginkgo Bioworks has raised nearly half a billion dollars to pursue applications for industrial biology.
“Engineering thinking has arrived in biology and the number of entrepreneurs that are interested in this area has grown dramatically,” says Pillar founding partner Jamie Goldstein, in a statement. “Unlike classic biotech, these ideas don’t require tens or hundreds of millions before you can demonstrate value — creating the opportunity for different funding models.”
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WeWork and Uber are proof valuations are meaningless
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
This week Kate and Alex were back to cover a lot of late-stage news, which they rounded up with some early-stage notes toward the end. As a reminder, come check out the show at Disrupt SF if you are in town, we’ll be out amongst startups, chatting all things startups and money.
Up top, we dug into WeWork and the latest from the company’s continuing IPO saga. The question regarding the co-working company’s public offering has changed to whether the IPO will happen this year, not just at what price the firm can entice enough investment to actually get public.
Alex has written about the company’s cash appetite a few times now, which raise the question of how long the company can survive without some sort of large, external investment. If SoftBank is willing to commit more capital is an open question.
Moving along to Uber, the firm underwent layoffs again this week. More than 400 people, or 8% of the operations, were cut as the company attempts to streamline operations, cut costs and, well, take baby steps toward profitability.
Turning to the early-stage part of the world, there’s a new early-stage-focused venture fund out there, Work Life Ventures, which intends to put small checks into promising SaaS companies. The firm is led by SaaS School founder Brianne Kimmel, a well-known angel investor in the enterprise space. So far she’s backed three companies out of the fund, including recent Y Combinator standout Tandem.
We finished off the episode with… cereal. A company called Magic Spoon (their website is here, as promised) raised $5.5 million this week for its D2C breakfast business. Our take is that the price point is a bit too high for comfort in its current iteration. It’ll be interesting to see if the startup can lower its prices now that it has new capital.
We’ll be back in a week! Chat soon, and please stop telling us to become angel investors!
Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify, Pocket Casts, Downcast and all the casts.
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Element AI raises $151M on a $600-700M valuation to help companies build and run AI solutions
While tech giants like Google and Amazon build and invest in a multitude of artificial intelligence applications to grow their businesses, a startup has raised a big round of funding to help those that are not technology businesses by nature also jump into the AI fray.
Element AI, the very well-funded, well-connected Canadian startup that has built an AI systems integrator of sorts to help other companies develop and implement artificial intelligence solutions — an “Accenture” for machine learning, neural network-based solutions, computer vision applications and so on — is today announcing a further 200 million Canadian dollars ($151.3 million) in funding, money that it plans to use to commercialise more of its products, as well as to continue working on R&D, specifically working on new AI solutions.
“Operationalising AI is currently the industry’s toughest challenge, and few companies have been successful at taking proofs-of-concept out of the lab, imbedding them strategically in their operations, and delivering actual business impact,” said Element AI CEO Jean-François (JF) Gagné in a statement. “We are proud to be working with our new partners, who understand this challenge well, and to leverage each other’s expertise in taking AI solutions to market.”
The company did not disclose its valuation in the short statement announcing the funding, nor has it ever talked about it publicly, but PitchBook notes that as of its previous funding round of $102 million back in 2017, it had a post-money valuation of $300 million, a figure a source close to the company confirmed to me. From what I understand, the valuation now is between $600 million and $700 million, a mark of how Element AI has grown, which is especially interesting, considering how quiet is has been.
The funding is being led by Caisse de dépôt et placement du Québec (CDPQ), along with participation from McKinsey & Company and its advanced analytics company QuantumBlack; and the Québec government. Previous investors DCVC (Data Collective), Hanwha Asset Management, BDC (Business Development Bank of Canada), Real Ventures and others also participated, with the total raised to date now at C$340 million ($257 million). Other strategic investors in the company have included Microsoft, Nvidia and Intel.
Element AI was started under an interesting premise that goes something like this: AI is the next major transformational shift — not just in computing, but in how businesses operate. But not every business is a technology business by DNA, and that creates a digital divide of sorts between the companies that can identify a problem that can be fixed by AI and build/invest in the technology to do that and those that cannot.
Element AI opened for business from the start as a kind of “AI shop” for the latter kinds of enterprises, to help them identify areas where they could build AI solutions to work better, and then build and implement those solutions. Today it offers products in insurance, financial services, manufacturing, logistics and retail — a list that is likely to get longer and deeper with this latest funding.
One catch about Element AI is that the company has not been very forthcoming about its customer list up to now — those that have been named as partners include Bank of Canada and Gore Mutual, but there is a very notable absence of case studies or reference customers on its site.
However, from what we understand, this is more a by-product of the companies (both Element AI and its customers) wishing to keep involvement quiet for competitive and other reasons; and in fact there are apparently a number of large enterprises that are building and deploying long-term products working with the startup. We have also been told big investors in this latest round (specifically McKinsey) are bringing in customers of their own by way of this deal, expanding that list. Total bookings are a “significant double digit million number” at the moment.
“With this transaction, we are investing capital and expertise alongside partners who are ideally suited to transform Element AI into a company with a commercial focus that anticipates and creates AI products to address clients’ needs,” said Charles Émond, EVP and head of Québec Investments and Global Strategic Planning at la Caisse, in a statement. CDPQ launched an AI Fund this year and this is coming out of that fund to help export more of the AI tech and IP that has been incubated and developed in the region. “Through this fund, la Caisse wants to actively contribute to build and strengthen Québec’s global presence in artificial intelligence.”
Management consultancies like McKinsey would be obvious competitors to Element AI, but in fact, they are turning out to be customer pipelines, as traditional system integrators also often lack the deeper expertise needed in newer areas of computing. (And that’s even considering that McKinsey itself has been investing in building its own capabilities, for example through its acquisition of the analytics firm QuantumBlack.
“For McKinsey, this investment is all about helping our clients to further unlock the potential of AI and Machine Learning to improve business performance,” said Patrick Lahaie, senior partner and Montreal managing partner for McKinsey & Company, in a statement. “We look forward to collaborating closely with the talented team at Element AI in Canada and globally in our shared objective to turn cutting-edge thinking and technology into AI assets which will transform a wide range of industries and sectors. This investment fits into McKinsey’s long-term AI strategy, including the 2015 acquisition of QuantumBlack, which has grown substantially since then and will spearhead the collaboration with Element AI on behalf of our Firm.”
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India’s OkCredit raises $67M to help small merchants digitize their bookkeeping
OkCredit, a Bangalore-based startup that enables small merchants to digitize their bookkeeping, has raised $67 million in a new financing round to grow its business in the nation.
The Series B financing round for the two-year-old startup was led by Lightspeed and Tiger Global. The new round, which follows the Series A in June, increases OkCredit’s total raise to $83 million.
OkCredit operates an eponymous mobile app that allows merchants to keep track of their day-to-day purchases and sales. Last month, OkCredit founders told TechCrunch in an interview that the app had amassed more than 5 million active merchants across 2,000 cities in India.
Amy Wu, a partner at Lightspeed US, said OkCredit’s active users have grown 76 times since the beginning of the year. It’s one of the fastest-growing companies we’ve seen and reflects the incredible virality and network effects of the business,” Wu added.
A wide range of merchants, from roadside vendors to grocery shop owners and pharmacies, have joined OkCredit.
Even as more than 500 million users in India today are online, most merchants in the nation are yet to digitize their business, according to industry estimates. They still rely on large notebooks to keep a log of their transactions.
“Technology has moved from collecting payments in cash, to using point-of-sale machines. More recently, QR codes, paper bills turned to printed bills. But the one thing that has not changed is the fact that most customers still purchase goods on credit recorded in a notebook,” Harsh Pokharna, chief executive of OkCredit said in a statement.
Pokharna told TechCrunch today that the startup will use the capital to hire more people and grow its merchant user base. The startup also plans to build more products for merchants.
Vyapar and KhataBook are two more startups in India that are attempting to solve a similar problem.
In a statement, Harsha Kumar, a partner at Lightspeed, said, “technology adoption in India will happen across sectors and segments. For the longest time, mSME as a segment was ignored but we have seen through Udaan, OkCredit and other Lightspeed investments in the SME space that tech usage is growing rapidly. Very excited and honored to have a front row seat in this journey!”
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Another high-flying, heavily funded AR headset startup is shutting down
While Apple and Microsoft strain to sell augmented reality as the next major computing platform, many of the startups aiming to beat them to the punch are crashing and burning.
Daqri, which built enterprise-grade AR headsets, has shuttered its HQ, laid off many of its employees and is selling off assets ahead of a shutdown, former employees and sources close to the company tell TechCrunch.
In an email obtained by TechCrunch, the nearly 10-year-old company told its customers that it was pursuing an asset sale and was shutting down its cloud and smart-glasses hardware platforms by the end of September.
“I think the large majority of people who worked [at Daqri] are sad to see it closing down,” a former employee told TechCrunch. “[I] wish the end result was different.”
The company’s 18,000+ square foot Los Angeles headquarters (above) is currently listed as “available” by real estate firm Newmark Knight Frank. The company’s Sunnyvale offices appear to have been shuttered sometime prior to 2019.
Daqri’s shutdown is only the latest among heavily funded augmented reality startups seeking to court enterprise customers.
Earlier this year, Osterhout Design Group unloaded its AR glasses patents after acquisition talks with Magic Leap, Facebook and others stalled. Meta, an AR headset startup that raised $73 million from VCs, including Tencent, also sold its assets earlier this year after the company ran out of cash.
Daqri faced substantial challenges from competing headset makers, including Magic Leap and Microsoft, which were backed by more expansive war chests and institutional partnerships. While the headset company struggled to compete for enterprise customers, Daqri benefited from investor excitement surrounding the broader space. That is, until the investment climate for AR startups cooled.
Daqri was, at one point, speaking with a large private-equity firm about financing ahead of a potential IPO, but as the technical realities facing other AR companies came to light, the firm backed out and the deal crumbled, we are told.
As of mid-2017, a Wall Street Journal report detailed that Daqri had raised $275 million in funding. You won’t find many details on the sources of that funding, other than references to Tarsadia Investments, a private-equity firm in Los Angeles that took part in the company’s sole disclosed funding round. We’re told Tarsadia had taken controlling ownership of the firm after subsequent investments.
In early 2016, Daqri acquired Two Trees Photonics, a small U.K. startup that was building holographic display technologies for automotive customers. The U.K. division soon comprised a substantial portion of the entire company’s revenues, sources tell us. By early 2018, the division was spun out from Daqri as a separate company called Envisics, leaving the Daqri team to focus wholly on bringing augmented reality to enterprise customers.
The remaining head-worn AR division failed to gain momentum after prolonged setbacks in adoption of its AR smart glasses, including difficulties in training workers to use the futuristic hardware, a source told TechCrunch.
All the while, the company’s leadership put on a brave face as the startup sputtered. In an interview this year with Cornell Enterprise Magazine, Daqri CEO Roy Ashok told the publication that the startup was forecasting shipments of “tens of thousands” of pairs of its AR glasses in 2020.
Daqri, its founder and several executives did not respond to requests for comment.
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How to stop vanity marketing from killing your startup
Dick Talens
Contributor
Contributor
Dick Talens is a fitness and growth hacker.
In 2014, I got in on the ground floor of what I thought was a rocket ship. Fling was the fastest-growing app in 2014, and I was pulled in as their chief growth officer, with a handsome compensation package — one that in retrospect should have given me pause. Within 24 hours of arriving in London, I was greeted at the door by a Fling-branded Humvee, which wouldn’t even turn out to be the worst use of the company’s money.
Fling’s marketing team consisted of 20 people, or about 30% of the company. Skeptical that any startup needed a marketing team remotely close to that size, I sat down with each one of them to learn about each individual’s expertise, role and what value they added. Each focused on a particular area — online user acquisition, brand, partnerships, metrics, to name a few. Surprisingly, I found myself impressed with their skill sets, at least on paper.
Nevertheless, my spidey sense was tingling. It’s not that they were lazy or shirked responsibilities; in fact, each seemed like they tried to create value in earnest. But everyone on the team lacked a sense of urgency — the one that drives truly great startups to be thoughtful and careful about understanding why and how things work.
And when resources are seemingly infinite, any expenditure — whether time, money or both — seems like a good idea, so long as the return is net positive. And in isolation, perhaps many (or all of them) yield a positive ROI. The result was a constant cash-burn, despite “doing everything right” — everything was working, but it wasn’t working in a sustainable, manageable way, and I’d ended up buying into the hype. I’d been concerned about marketing bloat, and I was right. The company would eventually go under after burning $21 million.
I knew I was part of it. I could have stopped the bleed. But everything I was doing had a positive outcome — not one I could necessarily quantify or describe, but I knew it was there. We had all the money and time in the world — right up until we didn’t.
Before Fling I’d been scrappy, constantly brushing arms with death running one of the most popular fitness apps in the world perpetually from the end of our runway. After Fling, I’d developed bad habits — by my own hand — and had to force myself through a series of less glamorous but more fulfilling jobs wherein all that really mattered was results.
For me — and I’d say for any marketer — to develop resourcefulness, I needed to have spent significant time in an environment of scarcity, not abundance. This environment is the difference between whether or not a marketer ends up cutting their teeth and growing in their abilities or forever sucking on the teat provided by your friendly neighborhood VC.
And the word “resourcefulness” is a misnomer, containing a beautiful irony of sorts: it’s a trait that only develops when resources are running on empty.
It’s time for you to understand a new term — vanity marketing.
We had all the money and time in the world — right up until we didn’t.
Vanity marketing is a tempting investment for a company. It’s got some vague, ephemeral yet satisfying results — you’ve got a big party, you’ve got a wrapped Humvee, you’ve got something cool to point at, and perhaps you’ll achieve the mythical “virality” that gets a particular thing 10,000 shares or retweets.
You’re popular — a non-specific yet incredibly sexy thing that theoretically would mean that investors would talk to you, or reporters would speak to you, or that you’ve “made it.” It’s a result of the fact that many markets don’t have the level of scrutiny of, say, a sales team applied to them — marketing’s this big, powerful juggernaut where many people survive just by not getting fired.
If premature scaling is the leading killer of startups, marketing is the symptomless cancer that leads to its demise. Marketers with abundance ingrained into their mindset will spend until those resources are no longer there. It’s easy to succeed in marketing by burning capital to grow.
You know how there are some people who are entrepreneurs just so they can say they’re entrepreneurs? I’ve noticed a similar pattern in marketing. Everyone wants to call themselves a “growth hacker,” but no one wants to learn to write SQL or Python.
Why? Because it’s not sexy. Neither is obsessing over metrics like CPM, Average Order Value and cost per unique “add to cart.” What is sexy, though, is spending (other people’s) money to reach new audiences, and pointing at increasingly bigger numbers. The problem is that unless you get your hands dirty, you won’t actually be able to understand whether your marketing efforts command a return. I’ve seen marketers waste hundreds of thousands of dollars with no repercussions. Could you imagine if a salesperson expensed that same amount in sales trips without landing a single client?
Almost every single major startup flameout you’ve seen has had some form of major Vanity Marketing Spend, one totally divorced from, say, the cost of acquiring a single user. If you’re reading this and saying that you’re not one of these marketers, then I’m proud, yet suspicious, of you. It’s fine if you’ve dabbled — a happy hour here, a CES party there — and understood that those were brief attempts to get something that’s unquantifiable. And it’s even stupider if you’ve spent this money “just because everybody else is doing it.”
But the dark truth is that many, many marketing expenditures are totally unquantifiable — they have little to no grounding in reality beyond telling people you’ve spent money.
The boring, consistent marketing you can do — that you can analyze, that you can truly understand the effect of — is so much less interesting than the big, shiny objects. It might not look as impressive, but it’ll work. And it’ll teach you to succeed anywhere.
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Max Levchin’s Affirm seeks capital amid surge in fintech funding
Another consumer finance business is lining up investors for its largest cash infusion yet.
Affirm, founded by PayPal’s Max Levchin, is said to be raising as much as $1.5 billion in a combination of debt and equity, according to people with knowledge of the company’s fundraising activities. Josh Kushner’s New York venture capital firm Thrive Capital is said to be leading the financing, with participation from the San Francisco outfit Spark Capital.
Affirm declined to comment. Representatives of Thrive and Spark, existing Affirm investors, have not responded to a request for comment.
Sources familiar with Affirm, which gives consumers an alternative to personal loans and credit by financing online purchases at point-of-sale, presume the round will be made up largely of a line of credit from a large financial institution, known as a warehouse facility.
Affirm recently raised a $300 million Thrive-led Series F round in April at a valuation of $3 billion. Fintech companies focused on payments and lending, however, require a vast amount of capital to sustain operations. Those capital requirements coupled with the frothiness of the venture capital market justify this additional cash infusion.
To date, Affirm has raised $1.03 billion in funding from Ribbit Capital, Founders Fund, Andreessen Horowitz, Khosla Ventures, Lightspeed Venture Partners and more, according to PitchBook. Fellow fintech ‘unicorns’ Brex, Stripe, SoFi and Kabbage, for context, have collectively raised roughly $5 billion in debt and equity to date.
Affirm offers installment plans to online shoppers, a method of delayed payment historically reserved for large purchase like vehicles or luxury electronics. Using Affirm, consumers can create personalized installment plans for purchases as small as a pair of sneakers sold by StockX or as large as a diamond engagement ring from Diamond Nexus, for example.
Affirm, serving as an alternative to a credit card charge, requires no paperwork, minimum credit score or income. The company, however, makes money the same way as a credit card provider, with interest rates for Affirm’s loans falling between 10% and 30%.
Affirm’s fundraising efforts come as more and more companies are devoting ample resources to consumer and B2B lending. Affirm, doubling down on the opportunity in B2B, spun out a new financial services business focused entirely on business lending earlier this year. The company, Resolve, provides a “buy now, pay later” option tailored to B2B sales flow.
“Traditional B2B financing is slow, inaccurate and limits a business’s potential for growth because of an over reliance on email, call centers, faxes and manual invoicing processes,” Resolve wrote in an April press release. “Today, many companies offer a standard net 30-day payment plan only to their best and longest tenured customers, leaving others in need of financing to rely on credit cards or installment loans.”
Meanwhile, companies like Stripe and Square are making a concerted effort to explore other financial frontiers, with the former launching a lending tool as well as a corporate credit card this month. Square, for its part, recently introduced a new debit card, called the Square Card, allowing businesses to withdraw and spend money they’ve collected through Square payments.
Venture investment in fintech companies headquartered in the U.S. is poised to reach new highs this year. In the first eight months of 2019, $10.5 billion was funneled into the sector, following a record high of $11.6 billion in 2018. Globally, fintech investment is increasing, too, with nearly $20 billion deployed this year, per PitchBook.
Competition in the fintech space has accelerated growth and innovation, as consumer-friendly, frictionless tools permeate the conservative and highly-regulated finance industry.
Following a year of fintech mega-rounds, we expect to seem a series of fintech initial public offerings as soon as next year. Affirm, Robinhood, Stripe, SoFi, Coinbase, we’re looking at you.
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Voyage raises $31 million to bring driverless taxis to communities
Voyage, the autonomous vehicle startup that spun out of Udacity, announced Thursday it has raised $31 million in a round led by Franklin Templeton.
Khosla Ventures, Jaguar Land Rover’s InMotion Ventures and Chevron Technology Ventures also participated in the round. The company, which operates a ride-hailing service in retirement communities using self-driving cars supported by human safety drivers, has raised a total of $52 million since launching in 2017. The new funding includes a $3 million convertible note.
Voyage CEO Oliver Cameron has big plans for the fresh injection of capital, including hiring and expanding its fleet of self-driving Chrysler Pacifica minivans, which always have a human safety driver behind the wheel.
Ultimately, the expanded G2 fleet and staff are just the means toward Cameron’s grander mission to turn Voyage into a truly driverless and profitable ride-hailing company.
“It’s not just about solving self-driving technology,” Cameron told TechCrunch in a recent interview, explaining that a cost-effective vehicle designed to be driverless is the essential piece required to make this a profitable business.
The company is in the midst of a hiring campaign that Cameron hopes will take its 55-person staff to more than 150 over the next year. Voyage has had some success attracting high-profile people to fill executive-level positions, including CTO Drew Gray, who previously worked at Uber ATG, Otto, Cruise and Tesla, as well as former NIO and Tesla employee Davide Bacchet as director of autonomy.
Funds will also be used to increase its fleet of second-generation self-driving cars (called G2) that are currently being used in a 4,000-resident retirement community in San Jose, Calif., as well as The Villages, a 40-square-mile, 125,000-resident retirement city in Florida. Voyage’s G2 fleet has 12 vehicles. Cameron didn’t provide details on how many vehicles it will add to its G2 fleet, only describing it as a “nice jump that will allow us to serve consumers.”
Voyage used the G2 vehicles to create a template of sorts for its eventual driverless vehicle. This driverless product — a term Cameron has used in a previous post on Medium — will initially be limited to 25 miles per hour, which is the driving speed within the two retirement communities in which Voyage currently tests and operates. The vehicle might operate at a low speed, but they are capable of handling complex traffic interactions, he wrote.
“It won’t be the most cost-effective vehicle ever made because the industry still is in its infancy, but it will be a huge, huge, huge improvement over our G2 vehicle in terms of being be able to scale out a commercial service and make money on each ride,” Cameron said.
Voyage initially used modified Ford Fusion vehicles to test its autonomous vehicle technology, then introduced in July 2018 Chrysler Pacifica minivans, its second generation of autonomous vehicles. But the end goal has always been a driverless product.
TechCrunch previously reported that the company has partnered with an automaker to provide this next-generation vehicle that has been designed specifically for autonomous driving. Cameron wouldn’t name the automaker. The vehicle will be electric and it won’t be a retrofit like the Chrysler Pacifica Hybrid vehicles Voyage currently uses or its first-generation vehicle, a Ford Fusion.
Most importantly, and a detail Cameron did share with TechCrunch, is that the vehicle it uses for its driverless service will have redundancies and safety-critical applications built into it.
Voyage also has deals in place with Enterprise rental cars and Intact insurance company to help it scale.
“You can imagine leasing is much more optimal than purchasing and owning vehicles on your balance sheet,” Cameron said. “We have those deals in place that will allow us to not only get the vehicle costs down, but other aspects of the vehicle into the right place as well.”
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