Alphabet's self-driving company unit Waymo raised $2.25 billion in its first external funding round. Several Silicon Valley heavy-hitters participated, the company announced Monday.
The external funding is a sign that some of Alphabet's "Other Bets" companies like Waymo need much more capital than Alphabet is willing to provide on its own. Most "Other Bets" companies are funded through revenues generated by Alphabet's cash cow Google, which makes most of the company's profits thanks to its dominant digital ads business.
Investors in the latest round include Alphabet itself, along with outside firms including Silver Lake, Andreessen Horowitz and AutoNation, which disclosed Monday that it invested $50 million in Waymo. A little over a year ago, Alphabet's life sciences company Verily received $1 billion in a funding round led by Silver Lake.
"We've always approached our mission as a team sport, collaborating with our OEM and supplier partners, our operations partners, and the communities we serve to build and deploy the world's most experienced driver," said John Krafcik, CEO of Waymo in a blog post. "Today, we're expanding that team, adding financial investors and important strategic partners who bring decades of experience investing in and supporting successful technology companies building transformative products.
The investment will go toward hiring employees, and investments in technology and global operations, the company stated, adding that its driving technology has accrued more than 20 million miles on public roads and 10 billion simulated miles.
Waymo's betting on its ride-hailing service, Waymo One, which currently mostly operates in the Phoenix, Arizona area. The company, which is testing in other U.S. cities, also said it operates on "business applications," including a delivery service it calls Waymo Via. Last month, UPS said it is testing self-driving minivans in the Phoenix area over the next six months.
Waymo and other self-driving car companies have found wider adoption to be more difficult than expected.
CNBC first reported last summer that Waymo still largely relied on human safety drivers, and the company only started offering fully autonomous rides around that time. Last fall, Morgan Stanley cut its valuation on Waymo by 40% from $175 billion to $105 billion, concluding that the industry is moving toward commercialization more slowly than expected.
Last fall, CNBC found that Waymo shuttered its Austin facility, affecting at least 100 employees who described a "sudden" closure. Waymo said it was a relocation effort.
Investors and analysts still believe in the potential of widespread self-driving cars but say a broad rollout is still several years out.