This Startup Raised $10 Million To Make The Lidar Version Of The iPhone Camera
As a wave of recent laser sensor SPACs sputter on the stock market, new startup Red Leader is making a play on the industry with a different approach: focus on software, not hardware.
Red Leader is aiming to be the iPhone camera for laser technology to others’ DSLR—using software workarounds to compete with more advanced (and more expensive) hardware. The Mountain View, California, company announced itself to the world on Thursday with $10 million in Series A funding from NextView and Micron Ventures, the corporate venture capital arm of the semiconductor company. The startup, which has been operating quietly since 2018, previously raised about $3 million in seed capital from funds including NextView, Refactor Capital, Haystack and Hustle Fund. It’s now worth $55 million after the new round.
The company is building software for lidar, which stands for “light detection and ranging” and is most well-known for allowing self-driving cars to see the world. In the past two years, lidar hardware makers including Velodyne, Luminar, Aeva and Ouster have gone public via special purpose acquisition company deals in bids to boost funds. Across the board, these companies’ stocks have since fallen, often owing to underwhelming sales performance. “They’re basically all different flavors of the same question: ‘How can I make this physics package better?’” says Red Leader cofounder and CEO Jake Hillard of the incumbent public companies.
Red Leader’s software is focused on fine tuning lidar images, particularly for cheaper, lower-range sensors. In other words, the company is not building tech for autonomous vehicles that are still years away from mass adoption, but rather is targeting general robotic applications, like helping robotic forklifts or warehouse automation robots to sense their environments (for example, to avoid dropping a heavy object on a human). The secret sauce of the software, Hillard says, comes in the algorithms the team has written for signal processing, a component of the lidar system which affects the image quality. “We do one thing better than anyone else in the world and that is you get a live, real-time 3D map,” he says.
Hillard, 26, and Rebecca Wong, 25, launched Red Leader in January 2018, while they were engineering undergraduates at Stanford. Hillard had led a university research group in launching a laser satellite and worked briefly at SpaceX to help launch some of the first Starlink satellites, while Wong had expertise in high-altitude rockets. The pair received a $15,000 check from pre-seed firm Hustle Fund after Hillard pitched his idea on Red Leader to fund partner Elizabeth Yin at a Stanford event, prompting Hillard to drop out of college with only one academic term left (he later became a Thiel Fellow, owing to that decision). “It took two years to get anything past a whiteboard,” Hillard says. “It was basically four people in a San Francisco garage, doing a lot of math.”
The team achieved a mathematical breakthrough that allowed them to create a demo version of the software by the end of 2021, Hillard says. The demo, which the company has uploaded to YouTube, purports to show that with Red Leader’s software, a lidar system is able to see real-time images of the environment at 10 times higher resolution. “From November to January, we basically showed people the demo, and $10 million appeared in our bank account—it was amazing,” he says. Eric Bahn, one of Yin’s partners at Hustle Fund, says the company raised the funds at the perfect time, as many Series A funds now are “sitting on their hands” due to the market downturn and would be hesitant to back a deep tech company like Red Leader. “If they had tried to raise it now, I’m not sure the company would still be around,” he says. “But now, they’re totally unblocked to produce the first 100 units for their manufacturer.”
Red Leader has signed on five proof-of-concept contracts with customers Hillard says he cannot name, but which are netting the company roughly $250,000 in revenue this year. If all goes as he forecasts, Hillard says the company hopes to sign five customers onto $5 million to $15 million contracts to start installing their technology in a pilot phase by the first quarter of next year; then, within three years, he hopes to secure some $50 million contracts for full-scale production. With five contracts, that would amount to $250 million in revenue in 2025. Those are lofty goals (Velodyne, for example, made $62 million in 2021), but Micron Ventures investor Gayathri Radhakrishnan says she thinks it’s achievable, even if timelines may be altered depending on the company’s progress and market conditions. “With businesses like this, they really do scale as a step function,” says NextView’s Lee Hower. “We can debate if that’s going to happen in two or three or four or five years, but that is the likely shape of the revenue curve.”
“What’s nice about working with industrial companies is that, yes, they move really slowly, but if you genuinely have a solution and it works perfectly, then they’re like, ‘Let’s move,’” Hillard says.