Ridgeline Quarterly Update
Updates on deals, portfolio news, and interesting things in our world
We are very proud to have co-led Harbinger Motors’ $60M Series A round alongside THOR Industries and other industry leaders who are all committed to sustainability through mobility transformation. Below are Ryan Clinton’s (Ridgeline co-founder and Managing Partner) thoughts on Harbinger and our investment in the company. Ryan will join Harbinger’s Board of Directors on behalf of the Series A investors.
One Big Thing
At Ridgeline, our network provides us with the earliest access to great companies and founders, and our investment in Harbinger is an excellent use of that strength. John Harris, co-founder and CEO of Harbinger, and I worked together at Anduril Industries as early employees. He was one of the smartest people there, responsible for designing and bringing to production the products that were core to Anduril’s success. When he decided to leave Anduril and build Harbinger, I was honored to be one of the first people he called. On that first call, it appeared that John had identified a completely underserved segment of the transportation market—one that he and his co-founders’ backgrounds were perfectly suited to tackle. Their mission was extremely well-aligned with our thesis, serving both the supply chain and mobility industries with their EV chassis. At Ridgeline, we aim to invest in the platforms and technologies that can modernize foundational industries—in success, Harbinger will do exactly that.
Harbinger Motors is working to decarbonize last mile delivery by transforming medium-duty commercial and specialty vehicles through its electrified chassis, powertrains, and battery technologies. Harbinger's chassis is specifically designed to support multiple variations of cab and body combinations to include step-vans, cabbed box trucks, tow trucks, RVs and others. This, combined with their key partnerships with industry leading body builders and upfitters, opens the door to a multitude of custom purpose-driven vehicle solutions to be delivered to their customers. Their offerings boast an impressive 250-mile range on a single charge and can be rapidly recharged in under an hour.
Purely from an investment point of view, we see the opportunity in this sector as massive for two key reasons. Firstly, there's a dearth of competition in the medium-duty segment today. The majority of the attention we’ve seen about electrifying commercial vehicles has been focused on the light-duty segment or long-haul trucks. There are only a handful of players targeting this space, and no clear winner has emerged. Secondly, electrifying medium-duty vehicles aligns with the emissions reduction goals of many corporations that have logistics at the core of their operations. Many companies have committed to reducing their carbon footprint, but with alternative solutions like sustainable aviation fuel and electrified long-haul trucking still in their infancy, the medium-duty segment offers the most actionable path for these corporations to make meaningful progress toward their environmental objectives.
The Harbinger Difference: Unencumbered by the Status Quo
We invested in Harbinger so early that the company was really just three founders, a clear vision, and some very detailed plans, but we saw so much more there. The founders were seasoned experts who had figured out how to revolutionize an industry, and it showed in the thoughtfulness of their approach and projections. We had high confidence that they would succeed where others had failed. Eighteen months later they are proving us right. They’ve assembled a best-in-class team, built a fully scalable vehicle, and secured a base of world-class customers and partners that all see Harbinger as the future of the industry.
As is the first order of business for all great companies, Harbinger focused on bringing in the right talent. It’s clear to me that the strength of the company’s vision is what enabled them to inspire so many members to join the endeavor. They’ve brought on key former executives from Tesla, BMW, SpaceX, Google, Apple, Faraday, etc. The strength of this team comes through in the quality of vehicle that they’ve produced. The company just recently moved into new offices where they will build their alpha and beta vehicles over the next two years. We continue to be floored by how their operations have consistently delivered ahead of schedule and under budget.
I believe that Harbinger’s ability to deliver a lot of these early wins is grounded in their “clean-slate” approach to the vehicle. They’ve brought a lot of their design in-house and have shaped the chassis for today's needs. Among other things, this has already resulted in extending vehicle lifetime, creating a better and safer experience for drivers, while also equipping their vehicles for autonomous driving when that day comes.
Most of Harbinger’s competition is simply trying to force-fit electrification into existing vehicle designs and technology. This ends up being not only costly and ineffective but also creates some tech debt out of the gate. At Harbinger, they think of electrification as just the starting point. So, they think in terms of how to build the best electric vehicle and not simply how to make today’s vehicles electric. It’s a subtle nuance, but one that has made all the difference in the company’s success to date.
A Bright Future: Harbinger's Role in a Re-Imagined Medium-Duty Segment
As the company’s board director, Ridgeline will be partnering with the company to scale the business and be the "connective tissue" between Harbinger and Ridgeline’s anchor LPs, which are some of the company’s strongest potential customers.
In success, I see Harbinger electrifying not only a segment of vehicles but also a very visible segment of our collective “everyday” lives. Since delivery fleets will get electrified en masse, the impact will be different than seeing the occasional Tesla on the road. It could touch every delivery truck we see in our neighborhoods. Soon we might just think of delivery vehicles as electrified. In a lot of ways, success at Harbinger could also be the first major signal that the supply chain is being decarbonized.
New Investments
To Be Announced. In Q2, Ridgeline led a pre-seed round with participation from Exposition Ventures and strategic angels into a yet to be announced company.
Follow-on Investments
Harbinger Motors. Garden Grove, CA-based automotive manufacturer, raised $60M in Series A funding. The round was led by Ridgeline and THOR Industries, with participation from the Greycroft Coca‑Cola System Sustainability Fund, and new investors Riverstone Holdings, and Squarepoint Capital, and return investors Tiger Global, Kalyani Mobility, Maniv Mobility, Overture and Ironspring Ventures.
Portfolio Updates
AI Squared, an embedded AI company, closed two major enterprise deals in Q3. The first, with Vanguard, allows sales reps at Vanguard to interact with AI models directly inside their CRM. The other, with Rapid7, allows the company’s security teams to view the inference of a model directly within security applications.
Q-CTRL announced that it has achieved ISO/IEC 27001:2022 certification, making Q-CTRL the first independent software vendor (ISV) in the quantum technology sector to obtain this internationally recognized standard.
Space Force extended Wallaroo’s contract for on-orbit AI applications in partnership with New Mexico State University. The Phase 2 contract will demonstrate the deployment of ML models in a particularly challenging edge computing use case.
Eclypsium hired John Ewert to becomes the cybersecurity company's CFO and COO.
Cornelis Networks and StorIT announce strategic partnership to bring AI and HPC offerings to the Middle East and North Africa (MENA)
Following Satellite Vu’s successful launch of the first satellite in their planned constellation, the company has started preparing their imagery for commercialization. Their technology delivers invaluable and distinctive ‘First Light’ imagery detailing the potential of thermal infrared satellites as tools for monitoring urban heat stress, industrial energy waste and pollution, wildfires and other climate events, in near real-time.
From the Blog
Why We Invested in Matta: Unlocking Africa's Potential in the Global Supply Chain
Interesting Stuff
Following up from last quarter’s newsletter, we’re reading, discussing and thinking a lot about AI. We are convinced this super-cycle will be the next great move forward in technology and the productivity gains that get realized. This is a great summary blog from Elad Gil on why now is different. In short, we think AI will fall in line with the internet, mobile, and cloud computing as a major driver of value across the venture asset class and the larger economy.
To that point on the larger economy, the early research around the economic impact and productivity drivers are really fascinating. This study on the early days of Github Co-pilot is crazy with productivity impacts potentially reaching $1.5T. And this study looking at the impacts of Chat-GPT on a group of consultants within Boston Consulting Group showed meaningful gains in productivity and quality for both high and low performers. Interestingly, the low performers saw the greatest benefits.
We loved seeing Guru Chahal, Partner at Lightspeed, echo our sentiment about the long tail of model development and use. We agree this long-tail adoption curve will create huge opportunities for operational tools and prodcuts.
Clem Delangue, CEO of Hugging Face, doubling down on that prediction below. He also makes a great point that there are a lot of bad business models out there being obscured by economic incentives to train and run foundational models.
We’ve been thinking a lot about how infrastructure will be affected, especially in light of Nvidia’s eye popping growth and profitability in the last couple of quarters. We’re asking questions around whether this growth is sustainable and what could disrupt the current value chain as enterprises move out of this early stage of adoption.
The introduction of the term “Hardware Lottery” via this paper by Sarah Hooker was a fascinating read and is a reasonable explanation for the explosion of research on deep neural networks (due to advent of GPU/TPUs). This raises a number of questions around hardware specialization, other avenues of research in machine learning, and the role of software defined infrastructure in less popular ML techniques.
Another thought provoking read was this short blog published by Sequoia highlighting the potential over-investment in [GPU] infrastructure and the gap in current market demand to make up the difference.
One area that we think is already at the top of the minds of large enterprises is data encryption in the training and use of models. Encryption and security in AI will be an area of focus for Ridgeline in 2024. In support of this need, VMware, AMD, Samsung and RISC-V are pushing for confidential computing standards.
Coatue’s East Meets West conference deck is always a great macro perspective on the VC asset class, the opportunities and challenges, and what might be next.
And finally, Battery’s enterprise spending survey has great data on enterprise sentiment. While AI is certainly top of mind for many, enterprise CXOs are still focused on cloud, data, and security products.