Revenue, Somehow

(Source: Nikkei Asian Review)

Dan Primack has been writing about the stumbles of VC-backed companies that have grown tremendously but struggle with unit economics. WeWork is the poster child of the moment, but per Primack:

“There are dozens, if not hundreds, of other mature startups caught with their income statements down.”

While he’s not quite willing to come out and make a bold prediction, he hints that maybe, possibly, things might be tough for certain types of startups:

“For companies with reasonable controls and paths to profitability, all systems remain go….But for unicorns that never looked beyond the trough, it could be slaughter season.”

Where I think this intersects with autonomous vehicles is that so many AV startups have raised huge amounts of money without a clear path to revenue, much less profitability.

This aligns with another trend, which is the increasingly common belief that the deployment of driverless (i.e. no safety operator) Level 4 vehicles is going to take a while.

Yesterday I quoted an estimate from Aurora:

“We expect to see small-scale deployments of self-driving vehicles in the next five years, and then see the technology phase in over the next 30 to 50 years.”

Autonomous vehicles have tremendous capital requirements, which have thus far been financed either by automotive companies or VC firms. This has, in some cases, been spectacularly successful for early investors.

But if the funding well dries up, and we’re looking at 30 to 50 years until meaningful deployment, there’s going to be a push for revenue in the near term.

I’m interested to watch those revenue sources emerge.

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