Waymo raises $16 billion: robotaxis now outvalue carmakers

Sixteen billion dollars. Let that number sink in. This is not the valuation of the whole company; it is the size of the check investors have just written to Waymo. If you thought the hype around self-driving cars had faded after rivals' troubles, Alphabet has just proved otherwise in the most convincing way possible: with money.

After this round closes, Waymo is valued at $126 billion. To grasp the scale of the problem for the traditional auto industry: this puts a developer of software and sensors above most of the automotive giants that have been stamping out hardware for a hundred years. The robotaxi business has stopped being a "promising startup" inside Google and has become a titan able to swallow the budgets of small states.

The list of those who put money into this round reads like the guest list of a closed-door party in Davos. Besides Alphabet itself, which keeps believing in its creation, the round included Dragoneer, DST Global, Sequoia, Andreessen Horowitz (a16z), Mubadala, Silver Lake, Tiger Global and Temasek. This is so-called "smart money." When such funds enter a late-stage project with checks of this size, they are not playing the lottery. They are counting on an IPO and market dominance.

Why does this matter right now? The past year has been, to put it mildly, turbulent for autonomous driving. Cruise (GM's subsidiary) stumbled over safety and licensing problems, Apple quietly buried its Titan project, and Tesla is still feeding us promises of "full self-driving next year." Against that backdrop, Waymo looks like the only adult in the room. It has rolled out its service in San Francisco, Phoenix and Los Angeles slowly but steadily, avoiding loud scandals.

Bringing in outside investors of this caliber is a strategic move by Alphabet. First, it is validation. When only Google pours money into Waymo, it can be written off as a corporate hobby. When Sequoia and a16z invest, it is a business. Second, it spreads the risk. Scaling a robotaxi fleet demands colossal capital expenditure (CAPEX), and even Google's money printer is not infinite.

Now Waymo has a giant war chest to outpace competitors technologically and geographically. Expect aggressive expansion into new cities and, possibly, licensing of its technology to other automakers that have realized they cannot write such software themselves.

The bottom line: Waymo has effectively declared victory in the technology race. With $16 billion in the bank, it can survive any crisis and wait for competitors to burn out. Only one question remains: when will we see a WAYMO ticker on the stock exchange?