TuSimple
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Five-year old self-driving truck startup Embark Trucks Inc. said Wednesday it would merge with special purpose acquisition company Northern Genesis Acquisition Corp. II in a deal valued at $5.2 billion.
Embark takes a different approach to autonomous trucking: As opposed to manufacturing and operating a fleet of trucks themselves, which is the route rival TuSimple is taking, Embark offers its AV software as a service. Carriers and fleets can pay a per-mile subscription fee to access it. The company includes carriers Mesilla Valley Transportation and Bison Transport, and companies Anheuser-Busch InBev and HP Inc., among its partners.
Carriers purchase trucks with compatible hardware directly from OEMs, so Embark says it has designed its system to be “platform agnostic” across multiple components and manufacturers. The company says its software can simulate up to 1,200, 60-second scenarios per second, and make adaptive predictions using those scenarios for the behavior of other vehicles on the road.
Embark said in an investor presentation for the SPAC deal that it was targeting “driver-out,” or operating on roads without a safety driver, by 2023 and launching at a commercial scale across the American sunbelt the following year. However, Embark still has technical milestones yet to achieve, noting in the presentation that the software still needs to accomplish actions, such as interactions with emergency vehicles and responding to blown tires and other mechanical failures.
Upon closing, the transaction will inject Embark with around $615 million in gross cash proceeds, including $200 million in private investment in public equity (PIPE) funding from investors, including CPP Investments, Knight-Swift Transportation, Mubadala Capital, Sequoia Capital and Tiger Global Management.
Embark also said former Department of Transportation Secretary Elaine Chao was joining its board, likely a boon for a company operating in the autonomous trucking industry, which is still only authorized for commercial deployment in 24 states.
Embark was founded in 2016 by CEO Alex Rodrigues and CTO Brandon Moak, who worked together on autonomous driving while completing engineering degrees from Canada’s University of Waterloo. After launching out of Y Combinator, the company quickly went on to raise $117 million in total funding, including a $30 million Series B led by Sequoia Capital and a $70 million Series C led by Tiger Global Management.
The transaction is anticipated to close in the second half of 2021. The company joins competitor AV trucking developer Plus in going public via a SPAC merger. TuSimple opted for a traditional initial public offering in March.
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TuSimple and Waymo are in the lead in the emerging sector of autonomous trucking; TuSimple founder Xiaodi Hou and Waymo trucking head Boris Sofman had an in-depth discussion of their industry and the tech they’re building at TC Mobility 2020. Interestingly, while they’re solving for the same problems, they have very different backgrounds and approaches.
Hou and Sofman started out by talking about why they were pursuing the trucking market in the first place. (Quotes have been lightly edited for clarity.)
“The market is massive; I think in the United States, $700-$800 billion a year is spent on the trucking industry. It’s continuing to grow every single year,” said Sofman, who joined Waymo from Anki last year to lead the effort in freight. “And there’s a huge shortage of drivers today, which is only going to increase over the next period of time. It’s just such a clear need. But it’s not going to be overnight — there’s still a really long tail of challenges that you can’t avoid. So the way we talk about it is the things that are hardest are just different.”
“It’s really the cost and reward analysis, thinking about building the operating system,” said Hou. “The cost is the number of features that you develop, and the reward is basically how many miles are you driving — you charge on a per mile basis. From that cost-reward analysis, trucking is simply the natural way to go for us. The total number of issues that you need to solve is probably 10 times less, but maybe, you know, five times harder.”
“It’s really hard to quantify those numbers, though,” he concluded, “but you get my point.”
The two also discussed the complexity of creating a perceptual framework good enough to drive with.
“Even if you have perfect knowledge of the world, you have to predict what other objects and agents are going to do in that environment, and then make a decision yourself and the combination knows is very challenging,” said Sofman.
“What’s really helped us is a realization from the car side of the of the company many, many years ago that in order to help us solve this problem in the easiest way possible, and facilitate the challenges downstream, we had to create our own sensors,” he continued. “And so we have our own lidar, our own radar, our own cameras, and they have incredibly unique properties that were custom designed through five generations of hardware that try to really lean into the kind of most challenging situations that you just can’t avoid on the road.”
Hou explained that while many autonomous systems are descended from the approaches used in the famous DARPA Grand Challenge 15 years ago, TuSimple’s is a little more anthropomorphic.
“I think I’m heavily influenced by my background, which has a tinge of neuroscience. So I’m always thinking about building a machine that can see and think, as humans do,” he said. “In the DARPA challenge, people’s idea would be: Okay, write a dynamic system equation and solve this equation. For me, I’m trying to answer the question of, how do we reconstruct the world? Which is more about understanding the objects, understanding their attributes, even though some of the attributes may not directly contribute to the entire self-driving system.”
“We’re combining all the different, seemingly useless features together, so that we can reconstruct the so-called ‘qualia’ of the perception of the world,” continued Hou. “By doing that we find we have all the ingredients that we need to do whatever missions that we have.”
The two found themselves in disagreement over the idea that due to the major differences between highway driving and street-level driving, there are essentially two distinct problems to be solved.
Hou was of the opinion that “the overlap is rather small. Human society has declared certain types of rules for driving on the highway … this is a much more regulated system. But for local driving there’s actually no rules for interaction … in fact very different implicit social constructs to drive in different areas of the world. These are things that are very hard to model.”
Sofman, on the other hand, felt that while the problems are different, solving one contributes substantially to solving the other: “If you break up the problem into the many, many building blocks of an AV system, there’s a pretty huge leverage where even if you don’t solve the problem 100% it takes away 85%-90% of the complexity. We use the exact same sensors, exact same compute infrastructures, simulation framework, the perception system carries over, very largely, even if we have to retrain some of the models. The core of all of our algorithms are, we’re working to keep them the same.”
You can see the rest of that last exchange in the video above. This panel and many more from TC Sessions: Mobility 2020 are available to watch here for Extra Crunch subscribers.
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TuSimple, the self-driving truck startup backed by Sina, Nvidia, UPS and Tier 1 supplier Mando Corporation, is headed back into the marketplace in search of new capital from investors. The company has hired investment bank Morgan Stanley to help it raise $250 million, according to multiple sources familiar with the effort.
Morgan Stanley recently sent potential investors an informational packet, viewed by TechCrunch, that provides a snapshot of the company and an overview of its business model, as well as a pitch on why the company is poised to succeed — all standard fare for companies seeking investors.
TuSimple declined to comment.
The search for new capital comes as TuSimple pushes to ramp up amid an increasingly crowded pool of potential rivals.
TuSimple is a unique animal in the niche category of self-driving trucks. It was founded in 2015 at a time when most of the attention and capital in the autonomous vehicle industry was focused on passenger cars, and more specifically robotaxis.
Autonomous trucking existed in relative obscurity until high-profile engineers from Google launched Otto, a self-driving truck startup that was quickly acquired by Uber in August 2016. Startups Embark and the now defunct Starsky Robotics also launched in 2016. Meanwhile, TuSimple quietly scaled. In late 2017, TuSimple raised $55 million with plans to use those funds to scale up testing to two full truck fleets in China and the U.S. By 2018, TuSimple started testing on public roads, beginning with a 120-mile highway stretch between Tucson and Phoenix in Arizona and another segment in Shanghai.
Others have emerged in the past two years, including Ike and Kodiak Robotics. Even Waymo is pursuing self-driving trucks. Waymo has talked about trucks since at least 2017, but its self-driving trucks division began noticeably ramping up operations after April 2019, when it hired more than a dozen engineers and the former CEO of failed consumer robotics startup Anki Robotics. More recently, Amazon-backed Aurora has stepped into trucks.
TuSimple stands out for a number of reasons. It has managed to raise $298 million with a valuation of more than $1 billion, putting it into unicorn status. It has a large workforce and well-known partners like UPS. It also has R&D centers and testing operations in China and the United States. TuSimple’s research and development occurs in Beijing and San Diego. It has test centers in Shanghai and Tucson, Arizona.
Its ties to, and operations in China can be viewed as a benefit or a potential risk due to the current tensions with the U.S. Some of TuSimple’s earliest investors are from China, as well as its founding team. Sina, operator of China’s biggest microblogging site Weibo, is one of TuSimple’s earliest investors. Composite Capital, a Hong Kong-based investment firm and previous investor, is also an investor.
In recent years, the company has worked to diversify its investor base, bringing in established North American players. UPS, which is a customer, took a minority stake in TuSimple in 2019. The company announced it added about $120 million to a Series D funding round led by Sina. The round included new participants, such as CDH Investments, Lavender Capital and Tier 1 supplier Mando Corporation.
TuSimple has continued to scale its operations. As of March 2020, the company was making about 20 autonomous trips between Arizona and Texas each week with a fleet of more than 40 autonomous trucks. All of the trucks have a human safety operator behind the wheel.
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Greetings from Chittorgarh, one of my stops on a two-week excursion through Goa and Rajasthan, India. I’ve been a little too busy exploring, photographing cows and monkeys and eating a lot of delicious food to keep up with *all* the tech news, but I’ve still got the highlights.
For starters, if you haven’t heard yet, TechCrunch launched Extra Crunch, a paid premium subscription offering full of amazing content. As part of Extra Crunch, we’ll be doing deep dives on select businesses, beginning with Patreon. Read Patreon’s founding story here and learn how two college roommates built the world’s leading creator platform. Plus, we’ve got insights on Patreon’s product, business strategy, competitors and more.
Sign up for Extra Crunch membership here.
On to other news…
Y Combinator’s latest batch of startups is huge
So huge the Silicon Valley accelerator had to move locations and set up two stages at its upcoming demo days (March 18-19) to accommodate the more than 200 startups ready to pitch investors (who will have to hop between stages at the event). There will also be a virtual demo day live-streamed for some investors to watch “because there are so few seats.” Here’s what I’m wondering… At what point is a YC cohort too big? If investors aren’t even able to view all the companies at Demo Day, what exactly is the point? Send me your thoughts.
Another week, another SoftBank deal. The Vision Fund’s latest bet is autonomous delivery. The Japanese telecom giant has invested $940 million in Nuro, the developer of a custom unmanned vehicle designed for last-mile delivery of local goods and services. The startup, also backed by Greylock and Gaorong Capital, will use the cash to expand its delivery service, add new partners, hire employees and scale up its fleet of self-driving bots. And while we’re on the subject of autonomous, TuSimple, a self-driving truck startup, has raised a $95 million Series D at a unicorn valuation.
Mamoon Hamid and Ilya Fushman
TechCrunch’s Connie Loizos spoke with Mamoon Hamid and Ilya Fushman, who joined Kleiner Perkins from Social Capital and Index Ventures, respectively. The pair talked about Kleiner Perkins, touching on people who’ve left the firm, how its decision-making process now works, why there are no senior women in its ranks and what they make of SoftBank’s Vision Fund.
Here’s your weekly reminder to send me tips, suggestions and more to kate.clark@techcrunch.com or @KateClarkTweets.
Facebook CEO Mark Zuckerberg considered a multi-billion-dollar purchase of Unity, a game development platform. This is according to a new book coming out next week, “The History of the Future,” by Blake Harris, which digs deep into the founding story of Oculus and the drama surrounding the Facebook acquisition, subsequent lawsuits and personal politics of founder Palmer Luckey. Here’s more on the acquisition-that-could-have-been from TechCrunch’s Lucas Matney.
Indonesia-focused Intudo Ventures raised a new $50 million fund this week to invest in the world’s fourth most populated country; InReach Ventures, the “AI-powered” European VC, closed a new €53 million early-stage vehicle; and btov Partners closed an €80 million fund aimed at industrial tech startups.
Xiaomi-backed electric toothbrush startup Soocas raises $30M
Jobvite raises $200M+ and acquires three recruitment startups to expand its platform play
Opendoor files to raise another $200M
DriveNets emerges from stealth with $110M for its cloud-based alternative to network routers
Figma gets $40M Series C to put design tools in the cloud
Xiaomi-backed electric toothbrush Soocas raises $30 million Series C
Malt raises $28.6 million for its freelancer platform
Elevate Security announces $8M Series A to alter employee security behavior
Massless raises $2M to build an Apple Pencil for virtual reality
Just when you thought the scooter boom and the subscription-boom wouldn’t intersect, Grover arrived to prove you wrong. The startup is launching an e-scooter monthly subscription service in Germany. Their big idea is that instead of purchasing an e-scooter outright, GroverGo customers can enjoy unlimited e-scooter rides without the upfront costs or commitment of owning an e-scooter.
If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and General Catalyst’s Niko Bonatsos chat startups.
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