A Bay Area startup developing driverless vehicles, already deployed in San Mateo for deliveries, is raising a new round from investors that could double its total funding.
Faction Technology adds its AI-powered software to off-the-shelf vehicles, mostly three-wheelers from Arcimoto and ElectraMeccanica at the moment, and uses teleoperators to monitor and control the vehicles remotely.
The result is a driverless but not fully autonomous fleet of vehicles that are street-legal and don't require special permits from California's Department of Motor Vehicles, which regulates the deployment of so-called robotaxis like those from Waymo and Cruise. The DMV suspended Cruise's license on Tuesday.
Faction announced on Thursday that it was raising a seed extension round led by existing investor TDK Ventures, the venture capital arm of Japan's TDK Corporation. The round is still open, the Faction told me, but could reach as much as $6 million, which would double its total funding.
"Fully autonomous passenger vehicles may capture the imagination, but practical solutions will deliver the next generation of profitable, impactful business models," TDK Ventures wrote in a press release. It also praised Faction's "innovative approaches to fleet management, remote vehicle assistance, accurate positioning and safety."
Faction's investors include Y Combinator, Side Door Ventures, Kube VC, Uncorrelated Ventures, Fifty Years, Soma Capital and Trucks Venture Capital.
Ain McKendrick founded Faction in 2020 after driverless trucking startup Starsky Robotics shut down. McKendrick was Starsky's vice president of engineering.
He launched Faction with an eye towards making driverless vehicles that are street-ready and have real-world use cases.
The company is also developing operating systems that it can license to other companies. Faction calls its technology DriveLink and TeleAssist and says integrating it into other vehicles would cost manufacturers less than $15,000 per vehicle.
"It's a hardware-software-service combination," McKendrick told me last year. “You'll hear a lot of people in the automotive industry talking that they want to do this eventually, but I'd say the DNA for doing that is only found in certain areas, certain types of industries. This is an interesting inflection point right now where it's an opportunity to do for the vehicle space what smartphones did for mobile phones."
In February, Faction announced that its DriveLink and TeleAssist software were commercially available, and that the company was partnering with other vehicle manufacturers including another Bay Area startup, Telo Trucks, which is designing an electric pickup truck for launch in 2025 and is using Faction's technology.
Faction launched a pilot program in San Mateo last year with a local bakery called Cocola. Additional delivery partners for Faction's own fleet of delivery vehicles will be announced "soon."
"New customers include national brands for both retail and food delivery which will be announced soon," McKendrick said via email. "Existing customers like Cocola will be able to continue to engage with Faction and take advantage of expanded delivery fleets coming with new partners."
