Valens is about to raise $25 million more, says Calcalist, a business news outlet. As the company expects to complete the deal soon, it is merely a year since the previous financial round in which the company raised $20 million. It is no wonder the company has succeeded grabbing nearly $50 million a year: the company is on the track of success, as it recently launched a hardware device for smart cars, partnered with Daimler (Mercedes) and formed a new alliance that standardizes content streaming in cars (HDBaseT). [Read here for Zirra’s spotlight on Valens]
According to a report by Zirra, there is a consensus from various sources that Valens’ HDBaseT technology has many benefits over competing solutions: its lower latency and faster data transmission for longer distances over lighter, unshielded cable is probably the best in the market today. Low latency is important for the delayed transmission of content within a vehicle can be annoying in cases such as infotainment, but possibly deadly in situations where one is relying on cameras and sensors for safe driving. Also, experts point out that Valens’ ability to run five different data (audio, video, data, electrical power and control signals) types over one cable is unique and that it is a good fit for the automotive industry.
Valens had developed a chip that allows relatively single, simple and short cable to transmit high-speed video and audio, USB and data from few streams within the car. With such a technology, car manufacturers will allow drivers to listen to music, stream video or use apps directly from their phone into the infotainment system in the highest quality a car can offer. At the same time, the channel can be used for self-driving protocols and the telematics systems. As of today, no other company offers these capabilities altogether.
Imagine displays such as speed projected onto the windshield in front of the drive. And with additional data from the car’s sensors and its surroundings, it will be possible to project information such as parking places, hotel and restaurant reservations, and traffic information. The car’s side and rear windows will also become potential projection surfaces for such functions as entertainment and surf the Web. Increasingly connected cars require technology to handle the increased data transfers required within vehicles. Although there are not many cables inside current vehicles, the addition of cars of cameras, sensors, screens, and data processors need robust but lightweight cables for connectivity
Valens is a newcomer in the automotive industry. It was founded 11 years ago and spent most of its time and money in the home video industry, but experienced only a middling success in the harsh market. But when automakers started to discover the technological advantages found in HD video and data over short but reliable cables, Valens went in with all engines on.
This a reasonable move. Low-end consumer electronics like DVD players might be worth barely more than the cost of HDBaseT, making it not cost effective to use HDBaseT in low-cost products.
Success and Risk Factors by Zirra
Building A Standard
The company’s primary challenge is that industries such as automotive want standard connector technology. In order to succeed in selling an individual product, a large chunk of the market have to be convinced to adopt it and begin designing their products to be compatible soon. The automotive industry specifically is slow-moving, conservative, and built on long relationships between large corporations, and thus it is a difficult market to penetrate
Accordingly, partnerships that can help Valens advance their product towards becoming an industry standard are the key to success. Valens’ membership in the HDBaseT Alliance along with LG, Sony, Samsung, and others is a valuable asset to the company that gives it a shot at promoting HDBaseT with enough weight behind it to influence the automotive industry. Still, HDBaseT is not yet in a leading position, and Valens competes with many companies over 100 times their size in employee count and with billions of dollars in annual revenue such as Qualcomm and Broadcom-Avago.
According to one expert interviewed by Zirra, the HDBaseT Alliance gives Valens the ability to standardize HDBaseT Automotive at a much faster rate than competing solutions and gives Valens the advantage of certainty in designing their solutions and knowing the standard will support their chipsets.
Valens valued by Zirra
Who Will Join Mercedes?
Only two months ago, Valens announced a collaboration with major automotive company Daimler, whose divisions include Mercedes-Benz, Daimler Trucks, Smart Automobile and car-sharing company car2go. Daimler will embed HDBaseT in its future smart models. This is an important first step for Valens in penetrating the automotive market, as experts tell Zirra that once one company adopts a particular technology, others are more likely to follow
But Valens is not alone in the field. Leading competitor NXP is also a Contributing Member in the HDBaseT Alliance, further blurring the line between partner and competitor. Most of Valens’ competitors use Ethernet as their connectivity solution, making Valen’s product stand out due to its many features in one. However, many of Valens’ competitors are large corporations who dwarf Valens in size and resources.
Nevertheless, almost every major car manufacturer is expected to add technology and connectivity to their vehicles increasingly, and new players have entered the market including Tesla, Google, and rumors of a car from Apple. This makes both the automotive and the semiconductor industries hot markets, and despite its small size, Valens is at the intersection of both, with a product that reviews consider a strong challenger to anything offered by competitors
However, there are few risk points worth mentioning regarding Valens:
1.Valens will have to meet the automotive industry’s stringent electromagnetic emission requirements, which are considered tough and have challenged many companies.
2.Valens’ 5play feature: if one of the five functionalities malfunctions, there is no way to check it individually or isolate it from the other functionalities, as all of them are transmitted over a single cable. 5Play is a very positive thing for Valens, but it can complicate repairs or troubleshooting
3.Two of Valens’ six Co-Founders previously founded Ethernet transceiver company MystiCom. Despite burning through $50 million and reportedly discussing a sale in 2003 for $80 million, MystiCom was ultimately sold in 2005 to Connecticut-based TranSwitch for just $5.5 million. Nevertheless, Zirra’s analysis on Valens shows that Co-Founders and management team are highly regarded by experts, who called them accomplished.
4. Valens’ Co-Founders hold a small amount of shares in their company.
5.The semiconductor market has been undergoing consolidation lately, with Avago acquiring Broadcom Corporation in 2015 for $37 billion to become Broadcom Ltd., and Qualcomm acquiring NXP in 2016 for $47 billion in what is currently the largest deal in semiconductor history. This deal now makes Qualcomm the world’s biggest supplier of chips used in cars. These deals create a field with more dominant competitors for Valens to take on but could portend a lucrative eventual sale of Valens to an industry-leading semiconductor company
6. The company’s presence outside of Israel is limited.
7.There is a consensus that Valens’ primary challenge is to succeed in marketing and partnerships to gain traction in the automotive industry and edge out their much bigger competitors who offer inferior solutions. The $25 million new round will help Valens to try and achieve this goal. [Read here for Zirra’s spotlight on Valens]