Two years ago if you looked at the AV engineer landscape you saw:

A clear powerhouse in Waymo

A large team at Tesla hellbent on not using LiDAR

A stealthy startup pulling engineers from everyone called Zoox

A massive ridesharing startup that had just run through Carnegie Mellon’s talent called Uber

A growing YC startup building aftermarket AV kits

Apple building a massive team with the thought that they were going to build a car

…and a bunch of other teams at OEMs/Tier 1s “working on” autonomy.

A year ago things looked somewhat similar except that “quietly” a portion of the top talent from the leading players were moving on, Uber was raging forward post-Otto, Cruise was now acquired for $1B by GM, and AV engineers’ eyes were lighting up with dollar signs. It turns out, rightfully so.

What we’ve seen in the past year or so is numerous AV startups have popped up and raised seed (and more) financing towards various AV related goals. Countless startups touted that they were building plug and play autonomy, going from Level 3 to eventually Level 5. This had almost no go-to market but investors eyes were also lighting up with dollar signs and thus, many startups were funded at insane valuations (wrote about this here) on the hopes of billion-dollar acquihires.

Now, talent is so well-compensated (funded by large OEMs, tech companies, and VCs) and thinly spread throughout the AV community that it seems as if multiple AV startups are hitting ceilings on both pace and progress vs. the few larger players hellbent on winning the category.

I think what we’re going to see in the next 2 years are a variety of hastily raised seed extension rounds (or dressed up Series A’s) to these slow-moving AV startups, a contracting M&A market for traditional technical approach focused-teams, major talent consolidation across the leading teams, and a bunch of disappointed VCs (and founders).

For hiring, AV startups with a differentiated technical approach will have a fighting chance as they aggressively go after engineers that haven’t had a clear place within the “established” AV tech stack or are only part of experimental teams within the larger companies.

For fundraising, these startups will have to target savvy investors that can either understand how to parse new vs. old approaches (or layers of the stack), haven’t yet made a bet, or have a failed investment but still believe in the broader goal.