As an Alphabet subsidiary, Waymo isn’t often thought of as a startup. Moreover, because of that fact, it has nearly unlimited financial backing. Still, it is bleeding money from Alphabet while providing only minimal return. Some estimates suggest that Waymo’s operations cost the Big Tech company more than $1 billion annually.
As such, outside funding is still necessary. Waymo originally announced its first external funding round at the beginning of March. Recently, its already-massive round grew significantly. The self-driving car startup announced on Tuesday that its funding round is now worth a whopping $3 billion.
To say that Waymo is in a unique position is an understatement. Few startups have the backing of a company as large and powerful as Alphabet. That alone puts it at an advantage in the autonomous driving field. Its tireless work to push the sector forward also speaks for itself.
Perhaps that explains how Waymo was able to raise such a monstrous sum in its first external round. Prior to the additional funding, the original round closed in early March at $2.25 billion. Now, investors like T. Rowe Price Associates, Fidelity Management and Research Company, and Perry Creek Capital have pushed the total even higher.
It’s worth noting that T. Rowe Price Associates is also an investor in Cruise, one of Waymo’s main rivals. Moreover, it has backed electric vehicle startup Rivian. It appears that the firm is intent on capturing a significant profit regardless of who wins the race for the future of driving.
As for what Waymo will do with the new funding, the startup says that it will work to speed up its plans for commercial self-driving technology.
Currently, Waymo operates several fleets of autonomous test vehicles in various U.S. cities. Its most notable one is located in Phoenix, Arizona. There, it also operates a self-driving rideshare service similar to Uber or Lyft. Prior to the pandemic, Waymo claims that it was providing several thousand rides per week. Notably, 5 to 10 percent of those rides occurred without human safety drivers.
Even so, the revenue brought in by that service is paltry compared to what Alphabet spends to keep Waymo running. The additional funding will help alleviate some of that pressure.
Pushing the Pace
The decision to seek external funding may seem odd on the surface. However, it puts Waymo in a position for enormous success moving forward. It already had everything it needed to thrive. Now, Waymo has a surplus of funding to continue innovating at a faster pace than the competition.
The startup’s CEO, John Krafcik, said in a statement, “COVID-19 has underscored how fully self-driving technology can provide safe and hygienic personal mobility and delivery services.”
That doesn’t even account for the fact that many experts believe self-driving cars are the future of the automotive world. Fully self-driving vehicles are expected to arrive this decade and their numbers will only grow once they do.