As Uber winds down autonomous truck business, Otto founders aren’t giving up

Uber doled out more than $600 million to acquire self-driving truck startup Otto two years ago. Last week, Uber announced it was ceasing work on its autonomous trucking business to focus on cars.

Earlier this year, Uber settled a legal spat with Alphabet’s self-driving vehicle arm, Waymo, which had accused Uber and Otto of colluding to steal confidential information via former employee Anthony Levandowski, who left to found Otto. What impact this debacle had on Uber’s decision to halt its self-driving program isn’t clear, but what is clear is that those responsible for getting Otto off the ground are hell-bent on staying in the autonomous trucking realm.

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Levandowski was ousted from Uber in May of last year, but a few months ago details emerged to suggest that he was back with a new stealth startup called Kache.ai, which is apparently working on “intelligent transportation” involving trucks. Now Don Burnette, one of Otto’s other cofounders, is back at the helm of an autonomous long-haul trucking company called Kodiak Robotics.

Burnette left Uber in March of this year and almost immediately formed Kodiak in conjunction with Paz Eshel, a former investor at Battery Ventures. Today the startup made its first big announcement — it has raised $40 million in a series A round of funding led by Battery Ventures, with participation from CRV, Lightspeed Ventures, and Tusk Ventures.

This represents a substantial series A funding round for a three-month old startup that hasn’t done anything yet. But the investment is indicative not only of the value currently bestowed upon autonomous vehicle startups, but of the trucking industry in particular.

“This financing, coming just three months after founding Kodiak Robotics, is a huge validation for our vision,” Burnette noted. “We believe self-driving trucks will likely be the first autonomous vehicles to support a viable business model, and we are proud to have the support of such high-profile investors to help us execute on our plan.”

The U.S. freight market is worth more than $700 billion — a figure that stretches well into the trillions globally. That is why we’ve seen a slew of trucking startups nab big VC bucks in recent times, while Uber launched its Uber Freight business last year to match supply with demand in the trucking and logistics sphere.

“Autonomous driving is likely one of the most major technology shifts of the last 100 years,” added Battery Ventures’ Itzik Parnafes. “We have been researching this trend for several years and feel confident we are backing an experienced, savvy team that can capitalize on the opportunity in a unique way.”