Waymo just announced a significant milestone: its first external fundraising round. The self-driving division of Alphabet raked in $2.25 billion in a funding round led by Silver Lake, Canada Pension Plan Investment Board, and Mubadala Investment Company, the sovereign wealth fund of Abu Dhabi. Additional investors include Magna International, Andreessen Horowitz, and AutoNation, as well as Alphabet.
To date, Waymo has been an outlier in the world of self-driving cars, relying almost exclusively on the largesse of its corporate parent. That changes with today’s announcement, shifting Waymo into an uncertain but potentially lucrative new phase.
Waymo CEO John Krafcik framed it as an expansion of the roster of automakers, fleet logistics firms, transit agencies, and delivery companies with which Waymo already has partnerships. “We’re expanding that team, adding financial investors and important strategic partners who bring decades of experience investing in and supporting successful technology companies building transformative products,” Krafcik said in a statement. “With this injection of capital and business acumen, alongside Alphabet, we’ll deepen our investment in our people, our technology, and our operations, all in support of the deployment of the Waymo Driver around the world.”
Waymo is adding external representation to its board, including representatives of Silver Lake and the Canadian Pension Fund, Krafcik says. Those representatives will join him and other Waymo officials, as well as Alphabet executives.
This external round of investment has been a long time coming. Reports that Waymo was seeking outside investors first surfaced nearly a year ago, when The Information said that the Google spinoff was seeking capital at a valuation “at least several times” that of Cruise, the majority-owned subsidiary of General Motors worth nearly $15 billion.
Today’s announcement is sure to be welcome news to Waymo’s and Alphabet’s respective financial teams, which are charged with keeping the cash-intensive operation afloat. Waymo is said to be costing Alphabet nearly $1 billion and is only bringing in a paltry amount of revenue from its limited commercial robot taxi service in the suburbs of Phoenix, Arizona.
Waymo says the money will help speed up its plans to commercialize its revolutionary self-driving technology. From the announcement:
Waymo One, the world’s first public self-driving ride-hailing service, serves thousands of customers in Arizona and has already provided thousands of fully driverless rides to our riders, in a high-speed mixed usage market area larger than San Francisco. The Waymo Driver is now deployed across a variety of vehicle platforms and business applications, including Waymo Via, which is focused on all forms of goods delivery.
A couple of notes here. Waymo only provides its fully driverless rides (i.e. no safety driver) to customers who have signed NDAs with the company and not as part of its consumer-facing Waymo One service. The comparison to San Francisco is noteworthy because that is where Cruise is testing its self-driving cars in the hopes of eventually launching a similar ride-hailing service (which it argues is more complex than suburban Phoenix). The fifth generation of Waymo’s self-driving system is expected to roll out this year as part of its new fleet of Jaguar I-Paces. And to my knowledge, this is the first time Waymo is giving a name to its self-driving truck and delivery pursuits: Waymo Via.
So what about these investors? Silver Lake is a Menlo Park-based VC firm with investments in Alibaba, GoDaddy, and Broadcom, among other tech ventures. Most recently, Silver Lake helped Dell return to the public market after five years as a private company. The Mubadala Investment Company manages over $225 billion in assets, holds stakes in some of Abu Dhabi’s biggest companies, as well as stakes in global firms such as Spanish energy firm Cepsa and Austria’s OMV. The sovereign wealth fund was recently involved in a scandal involving its dealings with a Malaysian state fund.
Auto part supplier Magna was recently involved in building a concept electric car for Sony. It was also teaming up with Lyft to help build self-driving cars for the ride-hailing company until recently, when the company said it was shifting to driver assist technology. It also helps run Waymo’s factory in the Detroit area. AutoNation has an existing partnership with Waymo; the auto retail giant currently delivers Toyota parts in the Phoenix market using automated Waymo vehicles.