Uber is promoting the self-driving unit Uber ATG in a deal that may elevate Aurora’s valuation to $ 10 billion
Aurora innovation that The autonomous vehicle startup, backed by Sequoia Capital and Amazon, has reached an agreement with Uber to buy the self-propelled unit of the hailship company in a complex deal that will value the combined company at $ 10 billion.
Aurora doesn’t pay cash for Uber ATG, a company valued at $ 7.25 billion after a $ 1 billion investment last year by Toyota, DENSO, and SoftBank’s Vision Fund. Instead, Uber is turning its equity over to ATG and investing $ 400 million in Aurora, giving it a 26% stake in the combined company, according to a filing with the United States Securities and Exchange Commission. (To freshen up, according to the SEC, Uber held an 86.2% (fully diluted) stake in Uber ATG. Uber ATG’s investors combined held a 13.8% stake in the company.) Uber ATG shareholders will now will be minority shareholders of Aurora.
Uber CEO Dara Khosrowshahi will take a board seat in the newly expanded Aurora.
Founded in 2017, Aurora is focused on building the full self-driving stack, the underlying technology that enables vehicles to navigate highways and city streets without a human driver behind the wheel. Aurora has drawn attention and investment from well-known venture firms, management companies, and companies like Greylock Partners, Sequoia Capital, Amazon, and T. Rowe Price, due to founders Sterling Anderson, Drew Bagnell, and Chris Urmson all being, among others Veterans of the autonomous vehicle industry.
Urmson led the previous self-driving Google project before it became the alphabet company Waymo. Anderson is known for leading the development and launch of the automaker’s Tesla Model X and autopilot program. Bagnell, an associate professor at Carnegie Mellon, helped kickstart Uber’s drive for autonomy and eventually led the autonomy and awareness team at the Advanced Technologies Center in Pittsburgh.
Aurora plans to bring autonomous trucks to market first. However, Urmson has claimed that the company has other uses of its self-driving stack, such as robotic taxis. The contract with Uber ATG offers Aurora talent and operational facilities. It does, however, offer two other important areas: relationships with Uber ATG investors, especially Toyota, as well as a partnership with Uber that gives access to its huge hail-driving platform.
The story goes on
“The way we want to build this company was the attitude to build it to scale. Let’s create an environment where people can do their best work,” Urmson said in an interview Monday. “And then we look for great teams and bring them in. It’s a way to have a combination of talent and technology and, in this case, relationships.”
The announcement, which confirms TechCrunch’s coverage in November, marks the beginning of a major undertaking to merge Uber ATG, a 1,200-strong business unit with offices in Pittsburgh, San Francisco and Toronto, with its smaller competitor.
It’s not clear if all of Uber ATG’s employees will belong to Aurora, which employs 600 people and operates in the San Francisco Bay Area in Pittsburgh, Texas and Bozeman, Montana. At least one executive – Eric Meyhofer, CEO of Uber ATG – will not join the company.
Urmson stressed that the work to integrate the companies and their technology will begin without a hurry.
“One of the funniest things we’re going to be doing over the next 60 days is bringing the two teams together,” said Urmson. “And then look a little dispassionately at what the technology is that brings our first product to market and then reinforce it – whether from the existing Aurora team or the new Aurora team – and drive that forward, whether it’s ideas or code or Bits trades hardware together to speed our time to market. “
This isn’t Aurora’s first acquisition, although it is certainly the largest and most complex. In 2019, Aurora acquired Blackmore, a Bozeman, Montana-based lidar company, and simulation startup 7D Labs.
About AV history
For Uber, the deal is one of the last expensive activities to be spun off or sold as the company has focused on its core hail driving and delivery businesses. Last year, Uber dumped the joint micromobility unit Jump, sold a stake in its growing but still unprofitable logistics arm Uber Freight, and took over Postmates. Uber is also reportedly in talks to sell its autonomous air taxi business, Uber Elevate.
Uber ATG was one of the companies that promised long-term financial benefits but has caused a lot of pain, controversy, and upfront costs since its inception.
In early 2015, Uber began its pursuit of autonomous vehicles when it announced a strategic partnership with the National Robotics Center at Carnegie Mellon University. The agreement to work on the development of driverless vehicle technology resulted in Uber poaching dozens of NREC researchers and scientists. A year later, Uber acquired a self-driving truck startup called Otto, a startup founded by one of Google’s star engineers, Anthony Levandowski, along with three other Google veterans: Lior Ron, Claire Delaunay, and Don Burnette.
Two months after the acquisition, Google filed two arbitrations against Levandowski and Ron. Uber was not involved in any arbitration. While the arbitrations were in progress, Waymo separately filed a lawsuit against Uber in February 2017 for trade secret theft and patent infringement. Waymo alleged in the lawsuit, which was on trial but ended in a 2018 settlement, that Levandowski stole trade secrets that were then used by Uber.
After the trial was complete, Uber moved on, but was embroiled in yet another deadly controversy almost immediately when one of its autonomous test vehicles – which had a human safety driver behind the wheel – hit and killed a pedestrian in March 2018. The entire industry took a break and Uber stopped all testing.
Uber spun off Uber ATG in spring 2019 after Toyota, auto parts maker Denso and SoftBank’s Vision Fund funded $ 1 billion. Despite the spin-off, Uber was still faced with an expensive company. Uber reported in November that ATG and “other technologies” (including Uber Elevate) had a net loss of $ 303 million for the nine months ended September 30, 2020. In its S-1 document, Uber said it had invested $ 457 million in research and development costs for its ATG and “other technology programs” initiatives.
Despite trail of problems plaguing Uber ATG, Urmson insists the company has the talent and some interesting technology that make it a worthy asset.
“Some of the work they did in developing their next generation hardware for the vehicles is exciting and interesting,” he said. “On the software side, they have really cool stuff about prediction and how they combined prediction and the perception system.”
Others close to the deal said Uber ATG has valuable and talented mid- and low-level engineers, which makes the acquisition particularly attractive to Aurora.