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Illustration: Sarah Grillo/Axios

Two promising AV startups recently received eye-popping funding, but don't assume 2017's frothy hype is back.

The big picture: Blitzscaling, or investing to achieve massive growth before competitors do, doesn't work in the capital-intensive AV business. And with self-driving cars still a long way off, many contenders could start to fade in the face of massive demands for funding and talent.

What's happening: Two AV companies scored huge rounds of fresh funding in the last few days, giving them the resources to keep developing their technology and add engineering talent.

Meanwhile, in more modest but still important news yesterday, May Mobility raised $22 million in Series A funding to keep developing its last-mile AV transit solution.

Quick take: These companies have something in common: a path to commercialization. Nuro and May Mobility already have tiny fleets of low-speed AVs on the road. Aurora is developing a "driver" for any vehicle and has big-name partners including Hyundai and Volkswagen.

  • Leadership credibility matters, too. Some co-founders of all three companies are veterans of the 2007 DARPA Urban Challenge and others worked on Google's self-driving car project (now Waymo) before starting their own companies.

What we're seeing: With the magnitude of the challenges facing AV technology sinking in, investors have stopped chasing the dream and are narrowing their focus to companies with a commercial niche and actual revenue potential.

  • In contrast to the way software apps multiply, AV companies need to map each city individually and then test their vehicles on local roads before launching — a meticulous, 6-month effort that must be repeated for each city.
  • Even with massive investments of time and money, full-scale deployment remains slow and limited.
  • Safety must come before speed and scale. Consider Uber's missteps in Phoenix that led to a pedestrian's death.
  • Public fear of AVs remains an issue. People still have to decide whether AVs are safe, affordable, convenient — or even needed.

Where it stands: Some 60 companies are spending "high single-digit billions" annually to try to grab a commanding share of what's expected to be a $1 trillion AV market, says Mark Wakefield, managing director of advisory firm AlixPartners.

"The worry is that most of the money is going to be wasted because every one of them is hyper-convinced that they’re going to win. They’re clearly not going to win."
— Mark Wakefield

The bottom line: After a lot of churning, the cream is rising to the top, says Varun Jain of Qualcomm Ventures, which exited an early-stage investment in Cruise Automation when GM bought the AV startup in 2016.

"Companies that have a difficult path to market, or don’t have the talent, will struggle. So there will be a correction. But that's healthy."

Editor's note: this story was clarified to show that some of the founders of all three companies are veterans of the DARPA Urban Challenge.

Go deeper

Updated 24 mins ago - World

HRW: Over 100 former Afghan security members dead or missing under Taliban rule

Members of the Taliban movement patrol Kabul's airport in September. Photo: Valery Sharifulin/TASS via Getty Images

The Taliban have "killed or forcibly disappeared" over 100 former members of Afghanistan's security forces since the group took power in August, a Human Rights Watch report published Tuesday found.

Why it matters: Former military members and officials from the ousted government, activists and other Taliban critics are facing peril amid executions driven by revenge — despite Taliban promises of an "amnesty" with no retributions, notes the New York Times, which first reported the news.

4 hours ago - World

Barbados becomes a republic, replacing U.K. queen with president

Combination images of Dame Sandra Mason, president of Barbados, and Britain's Prince Charles at her swearing-in ceremony in Bridgetown, Barbados, late Monday.

Barbados officially became a republic at midnight local time after Dame Sandra Mason was sworn in as the Caribbean nation's first president in a ceremony attended by the United Kingdom's Prince Charles.

Why it matters: Mason replaced Britain's Queen Elizabeth as head of state Tuesday — removing the country's final remaining colonial tie to the U.K. almost 400 years after the first British ships arrived in Barbados.

Right-wingers making McCarthy sweat for future Speaker post

House Minority Leader Kevin McCarthy stands with his Republican colleagues outside the House on Nov. 17. Photo: Stefani Reynolds/Bloomberg via Getty Images

Right-wing elements in the Republican Party are complicating House Minority Leader Kevin McCarthy's attempts to become the next speaker of the House should the GOP take back the majority in 2022.

Why it matters: While McCarthy has worked carefully to build trust among the conservatives who tanked his chances at clinching the speakership in 2015, they're still circling ahead of the next Speaker vote in January 2023.