National

As companies progress from experiments with a few autonomous vehicles to pilot deployments of hundreds of them, early-stage startups — whose technologies and teams can give fleet operators unique advantages in quickly fielding AVs at scale — are being pre-emptively acquired at high prices.

Why it matters: While the broad deployment of AVs may still be years away, the race to capture market share is already transforming both venture investments and the types of startups that receive them.

Background: In March 2016, GM acquired Cruise Automation. Ford followed suit, buying a majority stake in Argo AI in February 2017 and acquiring Autonomic a year later. Aptiv, which spun out of Delphi, acquired nuTonomy last October.

Corporations acquire early-stage startups to achieve several goals:

Create a core team with deep AV experience and expertise, in an effort to accelerate fleet deployments and test the efficacy of various business models.

Control the set of hardware and software technologies that are viewed as key for safe and scalable AV deployments.

Maximize gains, since startups with experienced teams and essential technologies become more expensive to acquire with time. Intel paid a high price to acquire MobileEye, for example, than it would have had to when the company was earlier stage.

Early acquisitions are already driving new venture investment trends around AV technology:

Mega rounds: As prospective targets of high-price acquisitions, experienced startups enjoy unusually large funding rounds, often before they even need the money. For example, Aurora has already partnered with Volkswagen, Hyundai and Byton, while Nuro has partnered with Kroger.

Consolidation: Startups in AV sectors that are considered overfunded — such as sensors, driver analytics, mapping — and those competing directly with mega round recipients will have trouble raising new funding. Venture investors will work to merge such startups, seek to have them acquired by corporations (even for amounts that fall short of the startup’s invested capital), or may outright close them down (if funding further operations seems unlikely to yield financial gains).

What's next: Venture investors have begun to target early-stage startups working on specific AV use cases, such as managing a logistics AV fleet or enabling last-mile deliveries, rather than the technology underpinning autonomous mobility. As large-scale AV fleets are deployed, these early-stage startups will become likely targets of the next acquisition wave.

Evangelos Simoudis is a founder and managing director of Synapse Partners and the author of “The Big Data Opportunity in Our Driverless Future.”

VC firms are adjusting their strategies for AV startups

Early acquisitions are driving large rounds, consolidation and new opportunities.

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Transportation

Venture capital

Expert Voices

Business

As companies progress from experiments with a few autonomous vehicles to pilot deployments of hundreds of them, early-stage startups — whose technologies and teams can give fleet operators unique advantages in quickly fielding AVs at scale — are being pre-emptively acquired at high prices.Why it matters: While the broad deployment of AVs may still be years away, the race to capture market share is already transforming both venture investments and the types of startups that receive them.

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

As the popularity of single-passenger ride-hailing soars, cities struggling with worse congestion and longer travel times are starting to experiment with autonomous shuttles, especially for short trips.

Why it matters: AV ride-sharing could help to efficiently bridge gaps between other forms of transportation services, from public transit to bikes and scooters. This could reduce congestion and enable more travelers to complete their trips more quickly, though cities and companies may need to offer incentives to spur adoption.

What's next: AVs that could be introduced in the near term would be capable of short-distance applications — making connections to public transit and operating in dense urban areas with traffic restrictions. Their routes could change based on demand.

Yes, but: AVs are not likely to solve urban traffic congestion on their own, and they will still need more thorough testing and certification to earn consumer's trust.

Companies like Uber, Lyft and Ford that plan to offer diversified transportation services could operate three complementary types of fleets:

E-scooters, bikes and e-bikes — and eventually autonomous pods for 1-2 passengers

Shuttle fleets, including autonomous features

Ride-hailing fleets for individual and shared rides, eventually using robotaxis

What's needed: Intelligent digital platforms — whether developed by cities or by transportation companies — could integrate different modes of transportation into a personal travel plan that's optimized for consumer preferences like shortest travel time or lowest price.

Together with corporate and government incentives for ride-sharing, these platforms could also help cities to reach targets for congestion and emissions reductions.

The bottom line: As ride-sharing displaces privately owned vehicles, different forms of AVs could play larger roles on city streets. While not a panacea, their use in on-demand services could make urban transportation more efficient.

Evangelos Simoudis is the author of “The Big Data Opportunity in Our Driverless Future” and the founder and managing director of Synapse Partners, which advises and invests in companies working on AVs and next-generation mobility.

Deploying AVs for ride-sharing could make urban transit more efficient

Though they may require corporate and government incentives.

As the popularity of single-passenger ride-hailing soars, cities struggling with <a class="gtmContentClick" data-vars-link-text="worse congestion" data-vars-click-url="http://www.schallerconsult.com/rideservices/automobility.htm" data-vars-content-id="6e94a45b-0648-4518-96bb-eb8387bc5afa" data-vars-headline="Deploying AVs for ride-sharing could make urban transit more efficient" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="http://www.schallerconsult.com/rideservices/automobility.htm" target="_blank">worse congestion</a> and <a class="gtmContentClick" data-vars-link-text="longer travel times" data-vars-click-url="https://www.axios.com/urban-transport-av-cars-commute-emmissions-fd651577-473f-45ec-adaa-e3c8513ba522.html?" data-vars-content-id="6e94a45b-0648-4518-96bb-eb8387bc5afa" data-vars-headline="Deploying AVs for ride-sharing could make urban transit more efficient" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/urban-transport-av-cars-commute-emmissions-fd651577-473f-45ec-adaa-e3c8513ba522.html?" target="_self">longer travel times</a> are starting to experiment with <a class="gtmContentClick" data-vars-link-text="autonomous shuttles" data-vars-click-url="https://www.axios.com/shared-av-pilots-are-on-the-rise-in-us-cities-3a0cb91a-a545-4b93-abbd-979bc13692d2.html" data-vars-content-id="6e94a45b-0648-4518-96bb-eb8387bc5afa" data-vars-headline="Deploying AVs for ride-sharing could make urban transit more efficient" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/shared-av-pilots-are-on-the-rise-in-us-cities-3a0cb91a-a545-4b93-abbd-979bc13692d2.html" target="_self">autonomous shuttles</a>, especially for short trips.Why it matters: AV ride-sharing could help to efficiently bridge gaps between other forms of transportation services, from public transit to bikes and scooters. This could reduce congestion and enable more travelers to complete their trips more quickly, though cities and companies may need to offer incentives to spur adoption.

Evangelos Simoudis

Stories

Deploying AVs for ride-sharing could make urban transit more efficient

VC firms are adjusting their strategies for AV startups