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The CFO of GM’s driverless taxi startup Cruise says the company is ready to scale. San Francisco isn’t so sure.

October 12, 2022, 11:01 AM UTC

It’s like Uber. But the car is electric. And there’s no driver.

That’s the vision for Cruise, the autonomous taxi startup General Motors acquired in 2016 that has been running an overnight small-scale ride-share service in San Francisco. 

Pull up an app. A self-driving Chevy Bolt drives up. You hop in the backseat. Go on your way.

Cruise started offering rides to customers in June. With its initial fleet (comprised of around 70 Chevy Bolts in San Francisco, according to the company), Cruise vehicles have driven customers more than 400,000 miles with no driver, and there are upwards of 20,000 people on the waitlist to use the app, according to Bill Nash, Cruise’s CFO and a former finance executive in the cloud business group at Oracle. 

“We feel that we’re at a point where the AV technology itself is really no longer the blocker,” Nash says.

It’s easy to get excited about the idea of this kind of futuristic, Jetsons-like technology hitting the road. And cutting out the driver could—eventually—offer much-improved margins for a ride-share service. The prospect was enough to convince SoftBank’s Masayoshi Sun to plow $2.1 billion into the General Motors-controlled startup, joining investors like Honda Motor Company and Spark Capital—then for GM to scoop up SoftBank’s stake earlier this year and commit another $1.4 billion into the company. (GM now owns an 80% stake in the company and GM CEO Mary Barra is chair of Cruise’s board.) GM has been building a fully autonomous vehicle solely for Cruise, called the Cruise Origin, that Nash expects will hit the streets in the second or third quarter of 2023 and be able to fatten up the margins.

While the service is still “very much in launch phase right now,” according to Nash, Cruise is expanding into Austin and Phoenix, and it has publicly laid out a target of $1 billion in revenue by 2025. 

“We think that we’re at a point now where we’re the question is just our ability to scale,” Nash says.

There’s only one major problem: Are the vehicles ready yet? 

San Francisco doesn’t seem to think so.

In a 36-page letter to the U.S. Department of Transportation, submitted at the end of September, the city and county of San Francisco outlined a slew of grievances it hopes Cruise will be able to address, as well as data it argues the startup should collect before the company begins expanding its taxi service.

Most concerning are the slew of 911 calls referenced in the letter, which document complaints filed to the San Francisco police department and emergency management about driverless Cruise cars sitting disabled and blocking traffic, signaling in one direction yet moving in another, blocking transit vehicles, or in some instances, even driving on sidewalks. The City’s letter brought attention to one instance in early August in which a dispatcher tried to call Cruise’s hotline four times over six minutes in regards to an unresponsive Cruise vehicle, but no one picked up. 

In response to the letter, a Cruise spokesperson provided the following statement: “We’re proud that the overwhelming majority of public comments submitted on the Cruise Origin are positive, underscoring the vehicle’s sustainability and accessibility benefits and support for American jobs. We’ll continue working closely with NHTSA through their review process to ensure the safe and responsible deployment of this technology.”

The letter also drew attention to the well-publicized accident that took place in June, in which a Cruise vehicle was struck by a speeding oncoming car. The incident is currently under investigation by the National Highway Traffic Safety Administration, which declined to comment on the matter. There were only minor injuries due to the incident. Indeed, there have been no fatal crashes involving a Cruise vehicle (“San Francisco is grateful for this safety accomplishment,” the letter reads). Even so, zero fatal crashes may not mean Cruise AVs are superior at driving.

“We’ve been compliant with all the necessary reporting. We’re happy with the safety of our products. And we’ve made all the necessary adjustments to the service, based off of what we’ve been seeing from an operating perspective over the course of the last six months,” Nash told me.

The San Francisco letter comes as General Motors awaits key regulator approval for the Cruise Origin, the no-pedal, no-steering wheel autonomous car that will be used to scale Cruise’s operations. 

“That’s a pretty big unlock for us,” Nash says of the Origin getting close to production, noting that the Origin is much more spacious and was manufactured to last longer so it will help reduce the costs of the service. The National Highway Traffic Safety Administration is weighing approval for General Motors’ request for certain exemptions. 

Right now, Cruise is still operating as a standalone company, even if it is controlled by GM. Walmart, Honda, and Microsoft are all investors. But it helps to have the backing of an automotive giant, particularly in today’s market. GM has agreed to finance Cruise’s fleet moving forward, to the tune of $5 billion, Nash says, and the company ended the second quarter with $3.6 billion in cash and marketable securities. The company is still actively hiring, and Nash expects Cruise will have around 3,000 employees by the end of this year.

Will the company go public, or end up more of a subsidiary underneath the General Motors umbrella, I asked Nash.

“In terms of decisions that we’ll make around funding the business going forward, I think that’s still TBD. But we’re in a pretty good place now, and so, we’ll see,” Nash says.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Correction: The online version of this newsletter has been corrected to reflect that Cruise vehicles have driven customers more than 400,000 miles with no driver.

Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Connex One, a Manchester, U.K.-based customer engagement platform, raised £93 million ($103.72 million) in Series C funding from GP Bullhound

- Airwallex, a Melbourne, Australia-based fintech platform, raised $100 million in Series E extension funding. Square Peg, Salesforce Ventures, Sequoia Capital China, Lone Pine Capital, Hermitage Capital, 1835i Ventures, and Tencent invested in the round.

- Homa, a Paris, France-based game development company, raised $100 million in Series B funding. Quadrille Capital and Headline co-led the round and were joined by investors including Northzone, Fabric Ventures, Bpifrance, Eurazeo, and Singular.

- Immersive Labs, a Bristol, U.K.-based cyber resilience company, raised $66 million in funding. Ten Eleven Ventures led the round and was joined by investors including Goldman Sachs Asset Management, Summit Partners, Insight Partners, Menlo Ventures, and Citi Ventures

- Stairwell, a Mountain View, Calif.-based cybersecurity company, raised $45 million in Series B funding. Section 32 led the round and was joined by investors including Sequoia Capital, Accel, Lux Capital, Gradient Ventures, and other angels. 

- Brave Health, a Miami-based virtual mental health provider and engagement platform, raised $40 million in Series C funding. Town Hall Ventures led the round and was joined by investors including Union Square Ventures, City Light Capital, and others. 

- Pleno, a San Diego-based multi-omic instrument platform, raised $40 million in Series A funding. Deerfield Management Company led the round and was joined by Foresite Capital

- CrowdStreet, an Austin-based real estate investing platform, raised $28 million in funding. TIAA Ventures, Cypress Equity Investments, The Dinerstein Companies, Foulger-Pratt, Grotech Ventures, Rally Ventures, Seven Peaks Ventures, and Green Visor Capital invested in the round.

- IronVest, a New York-based cybersecurity startup, raised $23 million in seed funding. Accomplice led the round and was joined by investors including Trust Ventures, Ulysses, Joule Ventures, OurCrowd, and other angels. 

- Chronograph, a New York-based private markets technology company, raised $20 million in funding. Summit Partners led the round and was joined by investors including Carlyle Group and Nasdaq Ventures

- Insite AI, a Bee Cave, Texas-based category and revenue growth management solutions provider for consumer brands, raised $19 million in Series A funding. NewRoad Capital and M12 invested in the round. 

- Foxglove, a San Francisco-based robotics development platform, raised $15 million in Series A funding. Eclipse Ventures led the round and was joined by investors including Amplify Partners, Cruise co-founders Kyle Vogt and Daniel Kan, UC Berkeley's Pieter Abbeel, and others. 

- Rye, a remote-based Web3 e-commerce company, raised $14 million in seed funding. a16z crypto led the round and was joined by investors including Solana Ventures, GOAT Capital, L Catterton, Electric Ant, Electric Feel Ventures, and other angels. 

- Ntropy, a New York-based financial data intelligence platform, raised $11 million in Series A funding. Lakestar led the round and was joined by investors including QED Investors and January Ventures.

- Net Purpose, a London, U.K.-based sustainable investment platform, raised £10 million ($10.97 million) in Series A funding led by ETF Partners

- NocoDB, a San Francisco-based platform that turns a database into a smart spreadsheet,  raised $10.5 million in seed funding. Decibel and OSS Capital co-led the round and were joined by investors including Uncorrelated Ventures, Together.Fund, and other angels. 

- Solestial, a Tempe, Arizona-based solar energy company for space applications, raised $10 million in funding. Airbus Ventures led the round and was joined by investors including AEI HorizonX, GPVC, Stellar Ventures, Industrious Ventures, and others. 

- Levity.ai, a Berlin, Germany-based A.I. automation platform, raised $8.3 million in seed funding from Balderton Capital and Chalfen Ventures.

- OatFi, a New York-based working capital infrastructure provider for B2B payments platforms, raised $8 million in seed funding. QED Investors led the round and was joined by investors including Portage Ventures, Picus Capital, Cambrian Ventures, Fin VC, Dash Fund, and Lorimer Ventures

- Switch Bioworks, a San Carlos, Calif.-based fertilizer company, raised $2.3 million in funding. Emerson Collective, Acre Venture Partners, and Astanor Ventures invested in the round.

- FANtium, a Zug, Switzerland-based NFT-based athlete investment platform, raised $2 million in pre-seed funding. Sandbox COO and co-founder Sebastien Borget, Sorare growth lead Brian O'Hagan, Argent co-founder and CEO Itamar Lesuisse, and Spatial co-founder Anand Agarawala invested in the round.

PRIVATE EQUITY

- Thoma Bravo agreed to acquire ForgeRock, a San Francisco-based identity-verification software developer. A deal is valued at around $2.3 billion.

- Boecore, backed by Enlightenment Capital, acquired Ascension Engineering Group, a Colorado Springs-based space system and satellite communications engineering solutions provider for the defense and military industry. Financial terms were not disclosed. 

- CIVC Partners acquired a majority stake in Continuum Companies, a Conshohocken, Pa.-based property management and residential services platform provider to HOA customers. Financial terms were not disclosed. 

- Huron Capital acquired ACI, a Glenn Dale, Md.-based critical system repair and maintenance company. Financial terms were not disclosed. 

- SilverEdge Government Solutions, a Godspeed Capital Management portfolio company, acquired QVine, a Herndon, Va.-based software development, cloud services, and SaaS provider to U.S. Intelligence agencies. Financial terms were not disclosed. 

EXITS

- BNP Paribas agreed to acquire Kantox, a London, U.K.-based currency management automation software provider, from Partech Partners. Financial terms were not disclosed.

- The Partner Companies acquired UPG, a Houston-based components designer, manufacturer, and assembler for data center, health care, energy, and industrial end-markets, from an affiliate of Turnspire Capital Partners. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

- Nextview Ventures, a Boston and New York-based venture capital firm, raised $200 million across two funds. 

- Credo Ventures, a Prague-based venture capital firm, raised €75 million to invest in early-stage technology companies in Central and Eastern Europe.

PEOPLE

- Credo Ventures, a Prague, Czech Republic-based venture capital firm, hired Guillaume Fournier, Maciej Gnutek, and Karolina Mrozkova as general partners. Formerly, Fournier was with Pricefx, Gnutek was with Innovation Nest, and Mrozkova was with White Star Capital.

- DFJ Growth, a Menlo Park, Calif.-based venture capital firm, hired Jenni Leong as investor relations partner. Formerly, she was with Next Play Capital.

- Enhanced Healthcare Partners, a Salt Lake City, Utah-based private equity firm, promoted David Prendergast to principal, head of business development.

- NextView Ventures, a Boston and New York-based venture capital firm, hired Stephanie Palmeri as partner. Formerly, she was with Uncork Capital

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