Hope you’re all enjoying the warm weather 😎
Last week was a slower one for new deals. Take a look at some updates.
Stuff I’m Reading:
A.V. Spotlight: Sea Machines Robotics 🛥️
Autonomous boat startup Sea Machines just raised a $15M Series B from Accomplice and Huntington Ingalls. Other investors included Toyota AI Ventures, Brunswick, Geekdom Fund, NextGen VP, Eniac VC, and LaunchCapital.
Since its founding in 2015, the company has raised over $27M in capital. It was founded by Michael Johnson, who has spent the last 20 years working in marine offshore operations at places like Crowley Maritime. The Boston-based company also has offices in Denmark and Germany and is expanding to the Netherlands.
A Solid List of Corporate Backers
The three corporate VCs on the deal seem to have a strong alignment with Sea Machine’s products. Huntington Ingalls is a ~$7B public company and America’s largest military shipbuilder. Brunswick Corporation is a ~$5B public marine and boat engine producer behind the Mercury boat brand (the deal was sourced through Brunswick’s joint venture with TechNexus.) Lastly, Sea Machines is Toyota AI Ventures’ first foray into autonomous marine technology. It’s also their third investment in a Boston company, alongside Realtime Robotics and Perceptive Automata.
Why We Need Self Driving Boats
Sea Machines is focused on developing software and hardware that can be retrofitted into commercial marine vessels to make them remote controlled and/or autonomous. Right now, they’re targeting commercial survey vessels, patrol boats, ferries, and other small utility craft. But soon, they hope to bring their AV solution to large merchant and cruise ships, a product that they’re currently trialing with companies like Boston Harbor Cruises.
Its current technology is ideal for collaborative ship work, where two or more ships are surveying, tugging, or escorting. You can essentially drive one boat, and tell another boat with Sea Machines hardware and software to follow you at a safe distance.
Long term benefits of implementing the product could include reducing fuel emissions, accident frequency, crew costs, and the number of stops on a trip. Making voyages less expensive, safer, and autonomous could significantly reduce the upfront costs to do a marine surveying project.
Why They Might Be Easier Than Cars
This funding round reminded me of a tiny essay that Eric Stromberg wrote last week on self-driving cars. He writes that AI progress has provided society with solutions to problems that can afford to be 80-90% accurate.
Accuracy of 90% is great for sorting tomatoes, identifying faces, and other low-risk tasks that don’t endanger humans. However, it’s not ok for a self-driving car to only avoid hitting pedestrians 9 out of 10 times. It has to be very close to 100% accurate.
Stromberg calls these low-risk solutions that can sometimes be wrong “fault-tolerant use cases.” I would argue that autonomous marine vehicles can be commercialized while still being in the “fault-tolerant” category, whereas autonomous cars cannot. I’m not saying it’s easy to make boats safely traverse the ocean without a driver, but there are far fewer obstacles to avoid, pedestrians to yield to, and driving rules to abide by. It seems like a safer investment bet with a different profile of risks of regulatory hurdles to get tackle.
The AI/ML use cases that involve large machines moving quickly around people and other obstacles autonomously are so hard because they’re so fault-intolerant. That’s why when Amazon acquired autonomous driving tech company Zoox for $1.2B, it was only a 0.8x return to investors.
Look at all the stuff they had to account for in programming:
Versus the boats Sea Machines is targeting with its products:
With all that said, comparing self-driving cars to self-driving boats is sort of apples and oranges. Different markets, different acquirers, and different fundraising needs. I just think one will become commonplace much quicker than the other.
Other VC Financing Deals:
Three-year-old “Data-Security-as-a-Service” company Sotero just emerged from stealth and raised $5M in a round led by Gutbrain Ventures (an investment vehicle run by Sigma Prime’s Bob Davoli), with participation from Boston Seed Capital and PBJ Capital. The Burlington-based company helps businesses encrypt data across on-premise and cloud storage, integrating with the most common data stores on the market.
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