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Crowded field of autonomous wannabes puts investors to the test


Autonomous cars are the zeitgeist. The technology is difficult, exciting and aspirational. It also—let’s not forget—has already made some people a lot of money. The latest deal came on Monday, with the plan by Intel Corp. to buy publicly traded Mobileye NV for $15.3 billion. It isn’t surprising then that more folks are crowding this space. As of now 27 companies have gotten permits in California’s Autonomous Vehicle Tester Program, up from a dozen a year ago. Early on, most of the participants were big auto makers along with Google. Cruise Automation, the startup later acquired by General Motors, was the first startup to enter the fray.

Now smaller outfits are hitting the road in increasing numbers. Last week the most recent company to receive the California permit was PlusAI, with fewer than 20 employees, said David Liu, its co-founder and chief executive. PlusAI has raised a few million dollars from GSR Ventures, Lightspeed China Partners, Mayfield, Mr. Liu said. A testing permit also was granted to Renovo Motors Inc., a startup backed by True Ventures and others. Renovo used to be developing a high-end electric car called the Renovo Coupe. But recently all trace of the information on the Coupe had been erased from its website. Now its sparse website says that it is developing “Automated Mobility on Demand” and that its “technology merges self-driving software, data analytics, and automotive-grade safety systems” that could be used to automate vehicle fleets.

Renovo’s spokesman said that it was developing the prototype of the Coupe, but in that process it realized that much of the technology “had a broader purpose.” The interest from startups and venture-capital firms is clearly high, but so is the challenge of making a dent in a technology sector to which major companies are dedicating huge resources.

“The bar is so high that the majority of the players in the field are bigger companies...The number of companies actually working on this is small,” PlusAI’s Mr. Liu said. As investors try to make sense of this market, they will also need to beware the wannabes. When a sector gets hot, companies tend to rebrand around a hot buzzword. As more startups hit the road with self-driving technology, it will get harder to pick the winners. Write to Yuliya Chernova at yuliya.chernova@wsj.com


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