Israeli startup gets $30 million to build connected car chips as Microsoft and Intel battle for dominance
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Autotalks' Technology Illustration (courtesy)

Autotalks is one of the biggest players in the industry you haven’t heard of — yet

So-called “V2X” startup Autotalks bagged $30 million Series D funding round late last week in funding according to an announcement from the company. Their main physical product is an eponymously branded chipset that is built into vehicle models. They released a 2nd generation of the chipset in 2016, timely considering the explosion in connected cars and self-driving vehicles’ dominance of technology headlines worldwide.

“The selection process of chipsets for vehicles is a lengthy process in which we interact and work with both Tier-1s and car makers to embed our solution in new card models,” Autotalks CEO Hagai Zyss told Geektime by email. “The fact we provide a ‘pre-integrated’ solution makes the design process for car makers / Tier-1s a much easier task, allowing them to focus on their ‘added-value’ functionality.”

“We are very pleased with the completion of this financing round, supported by such strong syndicate. It demonstrates clear vote of confidence in Autotalks’ ability to execute and gain a leading market share,” Autotalks CEO Hagai Zyss wrote in a press release. “Our mission to equip vehicles with such lifesaving technology is now being adopted by the regulators and leading car manufacturers. I believe our chipsets will soon be part of most new vehicles worldwide.”

“V2X” (“vehicle-to-anything”) is just one acronym you’ll find connected to their work — “V2V” (“vehicle-to-vehicle”) and “V2I” (vehicle-to-infrastructure”) are a couple others. They’ve gotten their chips into things like the Audi AG roof antenna. They announced their autonomous-vehicle-specific product, the CRATON2, at the ITS World Congress in Melbourne last October. They have even gone so far as to integrate their chips into motorcycles.

While it is easier to integrate the chips into a vehicle when it’s built, they have gone out of their way to make sure they are adaptable to older models as well.

“These devices will allow older cars to be equipped with V2X capability – thus further enhancing the penetration of V2X to more vehicles,” said Zyss.

CB Insights wrote last July that automotive technology investments (including but not limited to connected cars) would probably break its annual investment benchmark by the time 2017 came around. V2V was considered a $15 billion market back in 2015 by Global Market Insights, with annual growth estimated at 5 percent per year through 2023. Their report explicitly names Autotalks as a major industry player along with other software companies like Qualcomm and Denso.

CB had tallied $450 million in deals into last summer, led by Zoox’s $200 million round from Lux Capital and DFJ. The only year that came close to this was 2013, when Mobileye raised $400 million (nearly two thirds of the industrial total four years ago).

Autotalks keeps pace with US regulations

They grabbed cash from some of Israel’s most prominent investors, including the Samsung Catalyst Fund, which is intensely focused on new car technologies these days. Alongside newcomer funders Fraser McCombs Venture and Vintage Investment Partners, the following Israeli high-rollers also added to money they have already given Autotalks: Magma Venture Capital, Gemini Israel Fund, Amiti Fund, Mitsui & Co. Global Investment, Liberty Media’s Liberty Israel Venture Fund, and Delek Motors.

Autotalks is not the first company to get money for this kind of tech by any means. Mobileye, acquired by Intel last week in a $15.3 billion deal constituting Israel’s largest tech acquisition ever, is one of the established players. Peloton Technology, Nauto, BestMile, Quanergy and Pittsburgh-based Cruise (acquired by General Motors) are among others.

One of the big safety uses for V2V is connecting 19-wheel freight trucks that can coordinate driving speeds or braking that might avoid high-impact highway crashes in the US. The US Department of Transportation (USDOT/DOT) has launched a V2V trial in Ann Arbor by Michigan University and the MIT Technology Review has called it one of 2015’s top breakthrough technologies.

Autotalks pointed out another recent USDOT policy that mandated DSRC — dedicated short-range communication — installation into all new light vehicles sold in the US by 2023. ” To meet this target,” the company says, “deployments will start in 2019.”

Small player versus Intel and Microsoft

Image credit: Mobileye

Image credit: Mobileye

Commoditization should position companies like Autotalks well for the near future, perhaps even encourage the company to move toward an IPO with a secure market position. With the latest investment being such a late stage round (Series D), the company should be plenty confident to go against the grain and leave the private markets. Big brother Mobileye made the move and obviously never lost its “acquit-ability,” if you will.

“In our view it just another proof of the value that exists in bringing innovative technologies into the auto industry,” Zyss said of the deal, about which he thinks plenty has been said. “We believe that our technology will play a key role in the accelerated move towards full autonomous driving. In parallel to the path to ‘full autonomy,’ V2X technology will help save many lives by addressing ‘non-line of site’/limited visibility use cases.”

While Intel is making a splash trying to corner car software, there is still plenty of competition. Toyota reached a deal to use the latter’s patents for future self-driving car development

“Microsoft invests $11.4 billion annually in research and development and for more than 30 years has been developing innovative technologies that are powering today’s connected car experiences,” asserted Erich Andersen, corporate VP and chief IP counsel of Microsoft’s Intellectual Property Group, said last week. “Microsoft doesn’t make cars; we are working closely with today’s car companies to help them meet customer demands…”

Every software company is jumping in right now, and limiting discussions about market dominance to Intel and Microsoft is probably unfair to say the least. As Mobileye has proven, a company that isn’t an American tech powerhouse can make an indisputable and impossible-to-ignore splash in an important technology market. With the experience and networks built by Autotalks for business, it’s plausible their actual networks could make them one of the startups to put on exit watch in the next few years.

 

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