Industry Insight: Toyota VC Unit Investing in Robotic Startups

To solve some of the world's biggest problems, it will take innovation in artificial intelligence (AI). That's the goal of Toyota AI Ventures, a Silicon Valley-based venture capital (VC) subsidiary of the Toyota Research Institute (TRI). Toyota AI Ventures invests in companies developing AI, autonomous mobility, cloud, data, and robotics technology.

Toyota AI Ventures recently issued a call for innovation in partnership with TRI, which furthers scientific discovery through AI and machine learning (ML) techniques. Toyota will offer startups a chance to secure from $500,000 to $2 million in VC funding and work with TRI on a proof of concept. The project is focused on developing mobile manipulation technology for assistive robots so they can aid people at home. Future projects may focus on automated driving.

PCMag spoke with Jim Adler, Founding Managing Director of Toyota AI Ventures, to discover how the company will drive VC funding and innovation in AI.

PCMag (PCM): Tell us about your work to bring innovative business models to market.

Jim Adler (JA): We are focused on bringing disruptive technology and innovative business models to market by engaging the startup community. We want to help these startups, watch how they develop, and see these interesting approaches be integrated into our lives. That's the fundamental reason why we're involved in this work.

We are Toyota's first standalone VC fund. We're a subsidiary of TRI, and we're a $100 million fund. We just had our one-year anniversary on July 11. We've invested in companies in AI, data, cloud, autonomy, and robotics. We work to be aligned with our startup companies and our co-investors. We really view the entrepreneur's success as our success and, if they're successful in the marketplace, then we will be successful.

PCM: What's the key to success when you're looking to invest in startups?

JA: Our ability to do 13 deals in as many months is a testament to the fact that it's important that we run fast and are not reckless. We want to [make] good deals, but there's always a trade-off between speed and quality. If you wait to be too sure about an investment, then you often miss it or lose it. But if you go too fast, then you can end up losing quality by not being as careful as you should be. We're trying to strike that balance, which, in the automotive industry, is difficult. For Toyota, clearly, it's difficult, but we've had great upper management that has really given us the reins to execute on this mission.

PCM: So, how do you actually strike that balance of speed and quality?

JA: I think we've had the luxury of being a subsidiary of TRI. We work with them in a lot of different ways. It does help us to be fast but also careful, and dial that knob to find the right balance between the two because you never get it exactly right. You're either going too fast or you're too careful, so it's a constant balance.

PCM: Tell us about Toyota AI Ventures' call for innovation. How will that advance the market for AI? What's your criteria to find something that's really innovative?

JA: This came out of TRI. We wanted to spur innovation and encourage people who aren't currently working in the space to possibly jump into it. If they're thinking about a startup, then they should consider forming a company around this. Of the companies in our portfolio to date, SLAMcore spun out of Imperial College London and May Mobility was formed out of the University of Michigan.

We've seen really innovative companies come out of universities, but we don't think it's only the purview of universities. I think there are a lot of creative people toiling away in garages all over the world. We want to let them know that assistive robots helping people in and around the home are an unrealized opportunity.

We thought this call for innovation would be a clear signal to the startup community that what we think is an area that is underserved is robotics in the home. We know it's not a safe bet to introduce robots in the home, but we believe it will be inevitable. Startups are often the ones that are the first at blazing that trail, and we think that will be the same here. We just wanted to give the startup community a bit of a nudge both in direction and in capital to realize their dreams.

PCM: What are examples of some other companies you've funded that come to mind?

JA: Intuition Robotics is building a social companion for older populations, for seniors. For understanding how emotional robots can interact with people effectively. We've done a really interesting investment in Boxbot, which is a full stack for last-mile delivery, and they're also a little stealthy but they're doing some amazing work.

Joby Aviation is an electric vertical takeoff and landing vehicle for, basically, Air Transportation-as-a-Service, and that's an amazing company. There are no more roads to be built. We're going to have to move into the skies to efficiently move around. We are excited, of course, at Toyota about mobility and the promise that air taxis might bring.

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PCM: How does Toyota AI Ventures provide mentorship to startups?

JA: The world is awash in capital right now for startup investments. I think what a corporate investor can do is a couple of things. One is, do no harm. Be on the side of the startup and help it be financially successful. That's job one. But then what value can you provide beyond the capital and make sure that you're aligned with its success?

As a corporation, we understand customers pretty well; we understand the dilemma of many startups. And having been on the other side of the table as an entrepreneur many times in my career, the worst thing an entrepreneur can do is work to develop a product that the market doesn't want. Product market validation is critical to a startup's success. If they find that product-market fit and deliver value to the market that customers will pay for, then that's the biggest initial hurdle an early-stage company must clear. Once they do that, then things start to roll, customers start to amass, revenues flow, profits ideally, and then the company really starts to move.

We also have a platform team headed by Natalie Fonseca Licciardi, our Vice President of Platform and Marketing, which is focused on recruiting and helping startups with public policies if they need help there—certainly with marketing and any other support that we can provide them. We also plug them into any Toyota groups that are looking for disruptive technology or innovative business models. We can certainly help on coaching, mentoring, providing services, and helping them connect to potential customers inside Toyota. I think we've been able to show that we can be a great partner to these companies, and it's exciting.

PCM: What role will startups play in the future of AI and robotics?

JA: We're in this interesting period where we're seeing a lot of technologies in AI and robotics not just live within the lab but in the marketplace, and to actually see the societal impacts of robotics as it moves into our lives. It's a fascinating time. We've read about it in science fiction novels and seen it in movies for decades, and now are starting to actually see these machines move into our world. It's creating a tremendous amount of value. The benefits are paramount, and the challenges are there as well.

You see many of these startups grappling with the lessons they're learning from bringing these machines to market, how they can leverage these lessons in how they run their business, and then ultimately how this shapes society—especially with autonomous vehicles. They're moving their [fleets] onto the road, and we need to make sure that they do so safely. Startups are a great place to first understand the market opportunities and implications of bringing this technology to market.

For example, May Mobility is running a full-stack microbus service in Detroit. It has three buses on a route and this is an autonomous system on a fixed route. But the company is bringing this technology into people's lives every day. People walk into a bus that has autonomous technology, and it's fascinating to watch how people deal with that reality. It's just a great time to be part of this journey.