LOS ALTOS, Calif.—Toyota Motor Corp. is doubling down on its efforts to invest in early-stage startups in the artificial intelligence and mobility industries.
The auto maker said May 2 that Toyota AI Ventures, the venture-capital arm of the Toyota Research Institute, will open a second $100 million fund dedicated to pursuing these investments. After launching its first fund with $100 million in July 2017, the Silicon Valley-based firm now has $200 million in capital commitments.
"We are just seeing a tremendous amount of opportunity, especially as the mobility landscape evolves," Jim Adler, managing director of Toyota AI Ventures told Automotive News. "We wanted to make sure we had the dry powder to find more great startups."
So far, the firm has crafted a diverse portfolio among its 19 investments in the first fund. Early-stage startups such as self-driving shuttle provider May Mobility, electric vertical-takeoff-and-landing company Joby Aviation and cognitive AI firm Intuition Robotics are among its initial investments.
Adler sketched out his investing strategy earlier this year on Shift: The Mobility Podcast. Going forward with the second fund, that philosophy remains unchanged.
He's looking not only for novel advances in technology across the AI, automated and robotic realms, he's further looking for founders with fleshed-out business plans grounded in reality.
So far, Adler says, he and his team vetted more than 1,500 companies while whittling the number that received investment to 19. What has changed, perhaps, over the past two years is the makeup of the entrepreneurs pitching Toyota AI Ventures.
"We're definitely seeing more mature founders," he said. "We're seeing the more grizzled entrepreneur that is a two- or three-time entrepreneur who has taken a disruptive technology and coupled it with an innovative business model and (is) seeing business traction. From an investor perspective, that is quite compelling."
The first fund still has money, Adler said, and no investments have yet been made from the second fund.
Signals of tempering
Broadly, the pace of investment in automotive technology has remained high, though there are signals it could temper over the next year. Consulting firm CB Insights says investors poured a record $8 billion into the segment in 2018, though the number of deals fell from a high of 212 in 2017 to 203 last year.
Those CB Insights numbers, however, do not include scooters, e-bikes and other micromobility modes. Those are areas that intrigue Adler.
"We're seeing more in micromobility as business models evolve and bifurcate, and we're seeing hardware-as-a-service," he said. "There's a separating out of hardware components and costs into a service, and that's really interesting to us. Pay by the trip or pay by the unit of consumption. I'm excited to see how this might evolve."