Softbank drives forward Vision Fund with $2.25bn GM autonomous vehicle investment

General Motors has become the latest business to catch the attention of Masayoshi Son’s SoftBank Vision Fund, as its autonomous vehicles subsidiary, Cruise, receives a $2.25 billion boost.

The cash will be invested into Cruise in two tranches. At the closing of the transaction, the Vision Fund will invest $900 million, alongside $1.1 billion from parent-company GM, while the remaining $1.35 billion will be invested at the point Cruise’s technology is ready for commercial deployment, this being forecast for early-2019. The total investment will see the Vision Fund holding a 19.6% stake in Cruise.

“Our Cruise and GM teams together have made tremendous progress over the last two years,” said GM CEO Mary Barra. “Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions and zero congestion.”

“GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions and congestion,” said Michael Ronen, Managing Partner of SoftBank Investment Advisers. “The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage. We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”

The Cruise business was initially founded in 2013, before entering Y Combinator in 2014 to perfect the business model and vision. GM bought Cruise in March 2016 for $581 million to bolster the software capabilities of the automotive giant and accelerate GM’s development of autonomous vehicle technology. Since that point the team has seemingly been making steady progress after largely been left to its own devices by GM, focusing on Level 4 and 5 vehicles in California, Arizona, and Michigan. Back in January, GM filed a Safety Petition with the Department of Transportation for its fourth-generation self-driving Cruise AV, which it claims is first production-ready vehicle able to operate without a driver, steering wheel, pedals or manual controls. The petition stated GM wanted to deploy vehicles in 2019.

While there have unsurprisingly been no updates from the Department of Transport, GM and Cruise are confident the vehicles will meet the standards set. So confident are the team that Cruise CEO Kyle Vogt wrote an article on Medium in September stating the third-generation vehicles would meet the requirements to operate autonomously.

“The car we’re unveiling today is actually our 3rd generation self-driving car, but it’s the first that meets the redundancy and safety requirements we believe are necessary to operate without a driver,” Vogt wrote. “There’s no other car like this in existence. In a few weeks, these cars will be a part of the fleet that carries Cruise employees anywhere in San Francisco using our app. For now, there will still be a human behind the wheel.”

Cruise Car

Vogt is confident in the progress of the business, and it actually pointing to the hardware, not the software, as one of the biggest complications. Of course developing an intelligent system which can interact with and react in real-time to the environment is certainly a complicated task, though the hardware has to be completely redesigned to be suitable for autonomous driving. According to Vogt, retrofitting existing vehicles is not a feasible solution, though some sceptics might point out this is a very convenient claim for the automotive manufacturers.

The GM acquisition has certainly added capital into the Cruise business, joint investments have allowed the workforce to expand by 1,100 over this period, however the seemingly bottomless bank account of competitors is stealing column inches. Google’s Waymo is one project which benefits from such a luxurious financial position, hitting the headlines for the right reasons, and occasionally the wrong ones. Last October, Waymo gained attention for making progress, but admitting its vehicles were unable to turn left.

Combining the steady GM progress, Vogt’s leadership (he did build his first ‘self-driving’ vehicle at 14 using a webcam, computer vision, and a power window motor), friendly faces in the rest of the Vision Fund portfolio and an extra $3.35 billion of capital certainly puts Cruise in a promising position in the autonomous race.

Softbank Vision Fund drops $164 million on maps

Softbank has continued its diversification strategy with another sizeable investment, this time in the big, wide world of mapping technology.

It might not sound like the most exciting arena, but it could be considered one of the most crucial for certain technologies. Whether it is as something as obvious autonomous vehicles, or a bit more subdued like the advertising models associated with social media platforms, accurate location data is critical. And we haven’t even begun to realize the benefits of IoT yet…

The injection of cash from Softbank Vision Fund is directed towards Mapbox, a location data platform for mobile and web applications operating out of Washington DC and Silicon Valley. Many would associate mapping technology with the Googlers, but Mapbox has been quietly accumulated customers and might provide a very viable alternative to the ‘do no evil’ business. An additional $164 million in Series C funding will certainly help mount a challenge.

The platform was initially launched in 2010, and now claims to reach 300 million people each month. When you count the likes of Snapchat, Bloomberg, Lyft or Lonely Planet as customers, the broad footprint starts to make a bit more sense. The team also claim to have 900,000 registered developers, and the cash will be used to build out the automotive unit (including the AI side), AR/VR/Gaming investments and increasing its presence in Southeast Asia, China, and Europe.

“We are mapping and measuring everything,” said Eric Gundersen, CEO of Mapbox. “The SoftBank team understands that location data is transformational to every industry. Additional capital accelerates our speed of capturing the market. This is a step function move that will transform the fundamentals of how everything – people and goods – move through our world.”

It’s an area of the industry which hasn’t received much recognition to date, perhaps because it is being dominated by Google. Just like doing an internet search, when people are looking up a location, Google seems to be the default platform. There is a simple reason for this, it is the best around. And there is another simple reason for that. Google has been investing in this area for quite a while, even before you could make any money from it.

The platform itself was started when a couple of Danish brothers sold their business (Where 2 Technologies) to Google in 2004. The first release was not until 2005, but twelve years later the platform has thousands of employees and contractors directly working in mapping. This is a brilliant example of a company investing in the long-term, a concept which seems to elude most executives.

To start with it was just a free feature for people to find their way. The connected economy wasn’t in full swing, and it was more useful for games than anything else. But with smartphones penetrating the mass market, it started to become a useful little idea. Apps wanted to integrate the platform, businesses could use it for advertising, and little ideas like autonomous driving are now starting to make waves.

Mapping is critical in the digital economy, and now that quirky little feature is looking like a very astute bet from the Googlers. Just like Android, it is a platform which doesn’t make any money directly, but fuels growth and innovation in other areas. Google’s bread and butter revenue machine is search advertising, and now Maps adds an extra dimension. This is on top of all the licensing fees it will be charging developers.

One risk for the industry is that mapping could end up going the same route as operating systems for smartphones. Android dominates this space, which has led to competition concerns in various countries around the world. Google Maps is arguably the most advanced platform out there, so this is certainly a viable concern.

Considering the importance of mapping technologies as a foundation block of the connected economy, this would appear to be a very smart bet from the Softbank team. The only risk is that the Mapbox is not able to compete with the innovative and cut-throat Googlers. Only time will tell, but $164 million will help.