Deal focus: Prosperity7 supports gradual ascent to L4

Autonomous driving technology is a melting pot of competing philosophies. Waymo versus Tesla – which concerns how quickly humans should give way to algorithms – is arguably the most profound.

Waymo advocates L4 from day one, aggressively pursuing a high degree of autonomy where vehicles are self-driving in certain environments but with the option of a human override. Tesla prefers a gradual approach, moving from L2 to L4: vehicles can change lanes, overtake, and park automatically; then they achieve conditional autonomy; and finally, they graduate to the Waymo level.

Starting with L2 means more immediate commercialisation, given L2 is often used interchangeably with ADAS (advanced driver-assistance system) and ADAS is already a feature in many electric vehicles (EVs). This resonates with Skylar Liu, a director at Prosperity7 Ventures, a growth equity fund established by Saudi Arabia state oil giant Saudi Aramco.

“By taking a progressive approach, you can generate revenue and support the development of higher-level autonomous driving technology," he said. "More importantly, mass production of vehicles equipped with L2 and L2.5+ solutions means we can continuously improve our engineering capabilities and algorithm capabilities, and expand more application scenarios to support higher-level autonomous driving development."

Liu’s view is informed by a five-year stint making investments for Baidu, which is widely referred to as the Whampoa Academy – a historical nod to China’s military academy – of autonomous driving. The industry’s best-known spinouts were initiated by Baidu alumni.

Prosperity7 Ventures recently made its first investment in China intelligent driving technology, and one of few by the firm in this area globally, by supporting Hyperview. The company is an autonomous driving technology provider that adheres to the Tesla philosophy.

The size of the investment was not disclosed. Prosperity7 said it participated in a round for Hyperview in February that amounted to over CNY 100m (USD 14.1m) and then made a separate investment of tens of millions of renminbi. The startup has raised several rounds of funding from the likes of Walden International, Hillhouse Capital, Linear Capital, BlueRun Ventures, and Goldstone Investment.

Hyperview was founded in 2018 by Feilong Liu, who previously worked for Cruise, a US-based autonomous driving business controlled by General Motors. He wanted to deliver a turnkey solution to commercial vehicle manufacturers, but the team soon realized that commercial implementation would take longer than predicted. Regulation and cost posed significant hurdles, as well as technology.

In 2019, the company became an ADAS supplier. It has since achieved mass production on 30 models, working with original equipment manufacturers (OEMs) like SAIC Motor, Great Wall Motor, Chery Automobile, JAC Motors, Li Auto, and BYD. The new capital will go towards R&D for next-generation ADAS and capacity expansion to meet the needs of a growing business with OEMs.

"Since last year we have noticed a lot of Chinese L4 players attempting to enter the ADAS space to generate revenue. Hyperview started down this path back in 2019. The pivot to ADAS would take a long time for a typical L4 player that starts with a software team and no hardware capabilities. It can take almost as much effort as writing code from scratch.” said Liu.

An L4 specialist looking to build a complete ADAS offering must alter its existing model – and reduce computing power – to embedded platforms used in ADAS. Moreover, the company would be stepping outside its comfort zone, engaging in back-and-forth with external hardware providers and considering stability and reliability in the context of large-scale production.

Traditional tier-one automotive industry suppliers are moving in the opposite direction but face many of the same problems. They started with a specific hardware offering such as cameras or other sensors and lack the software capabilities to get to the next level.

Having proven its commercial capability, Hyperview is now developing a L4 hydrogen truck, which is expected to launch by the end of this year. At the 2023 Shanghai International Auto Show in April, the company unveiled an L4 system based on bird’s eye view (BEV) perception technology, a new driving and parking integrated domain controller, and an accompanying intelligent camera module.

Prosperity7 will leverage its network to help Hyperview expand in the Middle East and globally. For example, there are logistics companies in Saudi Aramco’s portfolio that could use the L4 truck solution.

Despite the slowdown in private equity investment in China – especially in the growth-stage technology space – Prosperity7 remains active. The firm participated in funding rounds for several robotics start-ups last year and led rounds for artificial intelligence-driven drug discovery company Insilico Medicine and open-source software developer Zilliz.

"Prosperity7 focuses on disruptive, scalable, and highly competitive technologies and business models that can be global solutions. In the last decade, Disruptive technologies are primarily emerging from two regions – China and the US. So China is a natural focus area for prosperity7,” said Raed Twaily, head of business development at the firm.

"We have a single LP - Saudi Aramco and we take full advantage of that. We are patient capital. We can back our portfolio companies on the long-term horizon without looking at short-term private equity market conditions."

From Liu’s perspective, mobility is an opportunity worth waiting for. China produces more than half of the world’s laptops and mobile phones, but it only accounts for about 5% of global automobile manufacturing. If the momentum around autonomous driving and clean energy can be properly harnessed, China could catch up with and potentially pass its rivals, he contended.

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• Topics
• Greater China
• Expansion
• Technology
• Industrials
• China
• autonomous driving
• automobiles
• Prosperity7 Ventures