Deal focus: Neolix finds its self-driving niche

Yipin Ng, founding partner of Yunqi Partners, first encountered Neolix’s driverless vehicles two years ago while scouting for deals in Xiong’an New Area, a development zone about 100 kilometers southwest of Beijing. They are small – 1 meter wide, 2.5 m long and 1.7 m high – and every inch of space is used to carry goods. There’s no seat for a driver, even a dummy one. The average cruising speed is 5 kilometers per hour.

Yunqi ended up leading a more than RMB100 million ($14 million) Series A round for the company last May and re-upping in a RMB200 million extension last week. Addor Capital and Chinese electric vehicle manufacturer Lixiang Automotive led the latter tranche.

Contactless services are at a premium in the wake of the coronavirus outbreak and Neolix has dispatched 18 unmanned vehicles to Wuhan and dozens to other cities to assist with deliveries and street sterilization. From its founding in 2018 to the end of 2019, the company delivered 225 vehicles. About 300 orders have been received since the start of this year.

Nevertheless, Ng warns that COVID-19 might be deterring rapid deployment. Customers typically trial a vehicle for a couple of months and place a larger order if they find a good use case. This process has been slowed by the virus.

Even then, finding use cases in China can be difficult. Similar companies in the US have found a niche delivering groceries to homes located far from hypermarkets. This model is not cost-efficient when applied to China’s higher-density populations. Neolix responded by pivoting into group meal delivery services. “The vehicle transports goods to the point of delivery and the courier goes upstairs and knocks on the door. This solves the inefficiency of having five couriers all going in the same direction,” explains Ng.

In addition, the likes of Meituan-Dianping, JD.com and Alibaba Group use Neolix vehicles to move goods around industrial parks, while theme park operators use them to sell water, snacks and souvenirs. Equipped with cameras and sensors, the vehicles can also perform nighttime surveillance duties.

Opportunities are being explored in foreign markets as well, but China’s regulatory environment is more amenable than others. “I've seen many situations where the regulator says, ‘okay, go ahead', this is great for entrepreneurship. Then after you’ve run for long enough, they come back and give you a license,” says Ng.

Yunqi has invested heavily in the autonomous mobility space, backing DeepRoute and Keenon Robotics, which specialize in commercial vehicles and restaurant robots, respectively. While DeepRoute is solving complex problems, a niche player with a more straightforward solution can commercialize much faster.

"In terms of the deployment, Keenon is probably the most advanced, with 3,000 units delivered last year,” says Ng. “Neolix is the second most advanced, at least we have some commercial things going on. And then the DeepRoute is the slowest.”

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• Topics
• Greater China
• Early-stage
• Technology
• China
• Yunqi Partners
• coronavirus
• TMT