Texas-Size Investment Welcomes Gatik To Lone Star State

After successfully operating three high-profile tests of its technology, middle-mile autonomous vehicle startup Gatik is going big — as in Texas-size big. On Tuesday morning, Gatik announced that it had raised $85 million in a Series B funding round and that it would begin operations in the Lone Star State.

"With our exclusive focus on structured autonomy, we have unlocked lower costs, shorter delivery times, and sustainable, reliable capacity for our customers today," Gautam Narang, CEO and co-founder of Gatik, said in a statement. "Our long-term partnerships with the world's largest retailers, strategic relationships with OEMs and fleet servicing and maintenance partners have allowed us to address critical supply chain challenges and build an industry-defining business. With this financing, we are ideally positioned to commercialize our solution at scale." 

The oversubscribed funding round was led by new investor Koch Disruptive Technologies (KDT with participation from existing investors Innovation Innovation Endeavours, Wittington Ventures, FM Capital, Dynamo Ventures, Trucks VC, Intact Ventures, and others, including several strategic investors.

Total funding in Gatik has reached $114.5 million. The company, with offices in Palo Alto, California, and Ontario, Canada, said it would use the new funding to scale and deploy its fleet of Class 3-6 multitemperature autonomous box trucks in new markets in the U.S., including Texas, where the firm will join the AllianceTexas Mobility Innovation Zone (MIZ).

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Automating The Middle Mile

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"All of the progress we've made in the past four-and-one-half years has come to fruition now," Narang told Modern Shipper. "The focus is on expansion and growth."

Narang declined to say what the new value of Gatik is following the investment, noting only that it is "6X from our previous round." Plans include doubling headcount in the next six to nine months from the current 70 team members, and focusing on increasing revenue, which has grown more than 400% year-to-date over last year, he said.

Innovation Playground

MIZ is a purpose-built industrial development in North Texas that has been designed as a hub of supply chain innovation. The development plays host to a number of companies, including autonomous vehicle developer TuSimple, drone companies and railroads. All the companies participating in the program are involved in moving live freight.

Gatik has been running pilot programs with Walmart WMT in Arkansas and New Orleans, and with Loblaw Cos. L in Ontario, Canada. In Arkansas, Gatik's autonomous vehicles move items along a 2-mile route from a Walmart dark store (a store that stocks items for fulfillment but isn't open to the public) to a Walmart neighborhood market in Bentonville. Narang said those vehicles are now running without drivers in the cab.

"What we've learned is that box truck platforms, Class 3 to Class 6 trucks, are the ideal platforms for this segment. One of the learnings from our customers is they need this flexibility."

Gautam Narang, CEO and co-founder of Gatik

"We do have routes without anyone behind the wheel. … That basically is how we see our business model," he said. "We obsess over [the safety of] these few routes."

Narang said the company has moved slowly on this front, citing safety as a key tenet of the program.

"Internally we have a very high bar for safety," he noted. "We take a very defensive style of driving, so anything the system doesn't recognize [we avoid]. The use cases we have chosen and the way we have approached this makes for a very compelling safety argument. We have taken baby steps. We are confident and we are doing it today."

Route advantage

Gatik'A technology includes lidar, radar, and cameras. It recently began testing electric-powered autonomous vehicles in Louisiana in a pilot with Walmart. The electric vehicles in the Walmart pilot are based on a Ford Transit 350 HD chassis platform and feature Via Motors' electric powertrain.

Unlike most companies that are focused on last-mile autonomy, Gatik is one of the few attacking the middle mile — typically short-haul distances from point to point.

"We learned and realized that electrification and the middle mile are very ideally suited for each other," Narang said. "Range anxiety is a real thing, but in our use case it is not a thing because our trucks' runs are usually shorter. And our trucks are picking up and dropping off at their locations so the trucks can get charged while they are being unloaded."

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Related:

Read: Gatik to deploy electric-powered autonomous vehicles in New Orleans

Read: Gatik, Isuzu to partner on autonomous truck platform

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In the move into Texas, Narang said the state's welcoming attitude played a role in one of the nation's key markets.

"For us, this is a very special market for multiple reasons because [in part] it is very progressive on the regulation front," he said, adding that many of the company's current customers have big operations in the state. "Everyone has been very welcoming."

Texas also represents several new tests for Gatik. For the first time, the company will deploy 20- and 26-foot box trucks; until now all the tests have been run using 11-foot box trucks. It is also the first multi-tenant site Gatik will operate from.

"The aim is to operate these trucks around the clock, because the higher the uptime, the higher [the efficiency]," Narang noted. "Texas allows testing of this format."

Going Big In Texas

"Texas continues to thrive as a place of unlimited economic opportunity and we are proud to welcome a cutting-edge company like Gatik to Fort Worth," said Gov. Greg Abbott in a statement. "This facility will bring hundreds of jobs to the region and will further establish the Lone Star State as a leader in innovation. Gatik's investment is a testament to Texas' strong economic climate, robust infrastructure, and our unrivaled workforce. Thank you to Gatik and AllianceTexas Mobility Innovation Zone for their partnership to bring this facility to Fort Worth."

Narang believes Gatik will succeed because it is focused on a core pain point for the industry.

"What we've learned is that box truck platforms, Class 3 to Class 6 trucks, are the ideal platforms for this segment. One of the learnings from our customers is they need this flexibility," Narang said. "It's very important to stay focused. One of the issues I think the [autonomous vehicle] industry has seen is a lack of focus. … Right now improving on the technology in a more scalable way is what Gatik is focused on."

Earlier this year, Gatik announced a partnership with commercial vehicle manufacturer Isuzu North America. The collaboration will see Gatik install its autonomous driving technology into Isuzu N-Series truck models to create a Level 4 self-driving vehicle. The first test vehicles are expected to be deployed later this year.

Isuzu offers the N-Series in several capacities spanning Class 3 with a gross vehicle weight rating (GVWR) of 12,000 pounds and payload capacity of 6,796 pounds, up to a Class 5 vehicle with GVWR of 17,950 pounds and payload capacity up to 12,289 pounds. The low-cab-forward-designed vehicles are typically available with either a gas or diesel engine option. The test vehicle is an Isuzu NRR Class 5 19,500 GVRW diesel model.

Click for more Modern Shipper articles by Brian Straight.

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