Israeli startup Innoviz Technologies, which is developing a radar laser (LiDAR) for the auto industry based on semiconductors, today announced the completion of a $132 million Series C financing round within three years of the company's founding. Market sources believe that the round was held at a company value of $550-600 million, more than double the company value for its previous finding round in late 2017, in which Innoviz raised $73 million.
The round was led by Chinese funds China Merchants SINO-BLR Capital Management and Shenzhen Capital Group and New Alliance Capital, as well as Israeli investment institutions Harel Insurance Investments and Financial Services (TASE: HARL) and Phoenix Holdings (TASE: PHOE). Innoviz has now raised a total of $214 million, but the company announced that due to high demand among investors, the round would remain open for a second closing, to be announced in the coming months.
Innoviz's development, based on a high-definition solid-state LiDAR sensor, facilitates remote 3D scanning and provides a high-definition image of a vehicle's surrounding in all weather conditions. The final product is smaller and cheaper than comparable laser-based products, while significantly improving range and resolution.
Innoviz has so far launched two products based on this technology. The first, Innoviz Pro, is designed as a development platform for auto manufacturers, shared transportation companies, companies developing autonomous driving technology, and tier-1 suppliers. InnovizPro is designed to enable these companies to develop and test autonomous driving technology more effectively and precisely.
The second product, InnovizOne, is a programmed sensor for auto manufacturers that facilitates autonomous driving for advanced stages from 3 to 5 (stage 3 is conditionally autonomous in which the system is capably of taking over driving under certain conditions, for example on high-speed superhighways, while stage 5 is fully autonomous). The product detects objects and an environment at a range of up to 200 meters, offers a wide field of vision, and depth accuracy of less than 2 centimeters. Innoviz will install these sensors in BMW vehicles through Magna, one of the world's largest tier-1 suppliers and an important investor in Innoviz.
Innoviz is currently developing the second generation of these sensors, which will provide a larger range of vision, higher resolution, and a larger field of vision capable of providing an image up to 50 times more accurate than the existing sensor. The company manufactures its first sensor in Haifa, but the production line does not meet the standard required for autonomous driving products and is incapable of producing large enough quantities to meet the demand from the company.
Innoviz therefore plans to produce its new sensor in China, and is working on setting up a production line in that country. At the recent CES exhibition, Innoviz announced strategic cooperation with auto electronics giant Harman International Industries in which Innoviz's new LiDAR will be integrated in Harman's advanced driving system. Harman is part of Samsung Electronics; cooperation with it is likely to be a potential entry ticket into the South Korean auto industry for Innoviz.
Since it was founded in early 2016, Innoviz has formed a number of partnerships with a growing group of leading auto suppliers, among which are Harman, Magna, Aptiv, and HiRain Technologies. In addition, auto manufacturer BMW will begin installing Innoviz's LiDAR detectors in BMW's autonomous and semi-autonomous vehicles, starting in 2021. In late 2018, Innoviz completed its global business expansion by opening offices in Japan, Germany, China, and the US in order to maintain its proximity to markets with high demand for its products and existing customers, including auto manufacturers, tier-1 suppliers, large vehicle fleets, transportation services providers, mapping companies, robotics companies, etc.
The company now has 240 employees in its offices around the world. 225 of them are in Israel: 130 development personnel and the rest in operations and business development. Following the financing round, the company is planning to hired dozens more employees in the coming year. The money will also be used to continue setting up the company's production lines in China for manufacturing hundreds of thousands of units annually.
"Most of the employees we will hire will be for a team working on the software layer that analyzes the information from the sensors. It's like what Mobileye is doing in 2D, but our sensors create a 3D image, and that requires different algorithmics, because every pixel also has depth," says Innoviz cofounder and CEO Omer Kailef. "We have two generations of sensors, and the second generation will reach production in the coming year. We have very important improvements in range, resolution, and field of vision, and the algorithmics based on the sensor will also have to adapted to the new type of information. This gives us an opportunity to give the team a boost, so that it will grow."
Autonomous driving will be very significant in the Chinese market
"Globes": Intel CTO Dr. Michael Mayberry said that he believed that autonomous vehicles were far in the future, and many people agree with him. Is your sensor what we have been waiting for in autonomous driving?
Kailef: "Yes. It's really an industry in which everyone is charging ahead, but there's a very big difference between charging ahead and the sensors. There was a lot of hype, and many companies entered the new industry, but in the end, there was convergence. Today, there are players whose ability to reach a product is much clearer, and I'm now part of BMW's project for putting autonomous vehicle on the road by 2021. It will be a level three autonomous vehicle capable of fully autonomous driving on high-speed roads, and BMW is also working on a level four vehicle that will come out a year or two later. But I think that the difference between level two and level three is significant, because it enables drivers to really stay away from the steering wheel."
The financing round is very large even for a great vision like really autonomous vehicles. Why do you need so much money?
"We don't need it, but it gives us the ability to grow, and we need this ability in order to take advantage of the many opportunities. For example, BMW has cooperative ventures with many auto companies. As BMW's partner, our opportunity to work with other auto companies is clear. Part of the process with these companies is passing financing diligence because auto companies want to know that they can rely on a company that is on solid ground."
A lot of financial investors from China joined you in this round, in contrast to the auto companies that invested in the earlier round. How do you explain this?
"China decided several years ago that it would be a leader in artificial intelligence, and one of the first things in AI is autonomous driving. I spent quite a bit of time in China this year, and you feel the urgency in the air - there's a big race there, because the government is rewarding those that succeeded. It was clear to us that we needed financial reinforcement from China. A strategic investment can be good in order to bring the company to market, but financial investment is good in order to build a strong company. The financial investors we spoke with in China also received positive feedback about us from the auto players in the country.
"Furthermore, one of the very interesting markets in which I think autonomous driving will be important is the Chinese market. The Chinese government is investing billions in order to make China a technological leader in this area. Part of it is related to the Chinese government's desire for cleaner air there and to switch to electric transportation. Today, there are mega-cities in China that have already become smart cities, and a lot of government money is being invested in them to create infrastructure to accommodate autonomous vehicles, such as communications and mapping."
Innoviz's hint to the auto industry
In late 2018, Innoviz announced its expansion into the Chinese market and its work with transportation services providers, mapping companies, and robotics companies in the Chinese market. This is a hint that Innoviz's products are part of projects for smart autonomous vehicles for mass transit, and in markets not directly related to the auto industry. Innoviz also appointed a Chinese country manager, Rosana Su, who managed Mobileye's activity in China for the past decade, and is believed to be very close to the Chinese governmental regulatory system.
Does the government mapping project involve your activity?
"Not directly. There are government projects in China for mapping the roads, and we're actually producing a sensor capable of inexpensively mapping the world in 3D. Part of China's story is that it doesn't allow US companies to use such information, so it will be very difficult for a Chinese company to use technology developed in the US. One of the advantages of Israeli companies is that they can pass through the Chinese government walls."
Founders: Omer Kailef, Oren Rosenzweig, Amit Steinberg, and Oren Buskila
Employees: 240, including 225 in Israel
Offices: Rosh HaAyin, China, Germany, the US, and Japan
Capital raised: $214 million
Prominent investors: China Merchants SINO-BLR Capital Management; Shenzhen Capital Group; New Alliance Capital; Harel, Phoenix; Champion Motors; Delek Motors; auto equipment suppliers Delphi Automotive and Magna International; Naver; Glory Ventures; 360 Capital Partners; Zohar Zisapel; and venture capital funds Vertex Ventures, Magma Venture Partners, and Amiti Ventures
Published by Globes, Israel business news - en.globes.co.il - on March 26, 2019
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