Outrider and our push into autonomy
By: Evolv Ventures
Tags: Warehouse, Automation, Autonomous Vehicles, Warehouse Automation, Venture Capital

By: Bill Pescatello, Managing Partner at Evolv Ventures

Our focus on autonomy

At Evolv Ventures, we spend a great deal of time looking at the changing landscape for CPG companies and emerging technologies that can have the greatest impact on our industry. In that search, when it comes to logistics, there are few technologies we discuss more or that are as high profile as autonomous trucking. Its size and impact on global logistics and the CPG industry will be nothing short of revolutionary.

The global trucking industry is one of the largest markets in the world that touch all of our lives and has been estimated to be as large as $4T. In the United States, truck driving is the primary occupation in more than half of all US states. There are about 1 million truck drivers in the US, and even that is not enough. Worker shortages and driver costs continue to rise and are one of the biggest issues facing the trucking industry today. With rising costs and driver shortages, greater automation is in high demand and will continue to be a high priority throughout this ever-growing industry.

In terms of the importance of this market to the CPG industry, it is estimated that two-thirds of our nation’s consumable products are trucked to the market. It is one of the CPG industry’s greatest costs in bringing products to the market and innovations in trucking autonomy has the potential to save CPG companies hundreds of millions, if not billions, of dollars down the line.

In fact, it is estimated by McKinsey that shipping costs could decline by as much as 45% with full autonomy. These savings are game-changing and would have a profound effect on logistics costs and potentially improved margins for large CPG companies.

While the promise of full autonomy is impressive, we also have to be realistic about the timing and hurdles to reaching full autonomy. Most experts believe we are 10+ years away from seeing anything assembling full autonomy (some estimating decades) and the advances will need to come in incremental steps.

Safety considerations, technical impediments, local and national regulations, and building the infrastructure needed will take time. We will get there eventually, but there is a lot of work to do to get there. As we move to a world with fuller autonomy, very large companies will be built but countless emerging startups in the space will not survive this long adoption curve.

As investors, it will be critical to find the right opportunities in this space and the industry-changing companies that will likely come out the other side.

So where to invest?

At Evolv Ventures, we will continue to look at long haul autonomous trucking companies but have a specific investment focus today, due to the long adoption curve. Rather than investing in companies that may be a decade(s) away from being operational, we are focused on companies that can start to be successful now and will lead this evolution to full autonomy.

In particular, we are working and investing in autonomous technologies that can operate in smaller and more controlled environments. Companies that address automation within and around our plants, warehouses, and yards at Kraft Heinz. While this may initially represent a smaller market than long haul trucking, opportunities in these spaces still represent a significant market and are in high demand.

Of all the Fortune 500 companies we talk to regularly, we have yet to find one that was not actively looking for partners to more effectively automate their warehouse yard operations. Warehouse yards are notoriously inefficient and often neglected by partners. These operations have a significant impact on logistics costs and can greatly affect your speed to market.

While yard operations may not be a $100B+ market today, warehouse and shuttle operations represent what we estimate to be a $26B market, and will be one of the most important hubs in bringing about full autonomy for large shippers in the future.