May Mobility and Toyota AI Ventures: An Unexpected Connection

It's often presumed that when a startup founder's background includes a connection to a major investor's parent company, that relationship facilitated early funding. However, this wasn't the case with May Mobility and Toyota AI Ventures.

Their partnership materialized during May Mobility’s second seed round, following an initial seed raise achieved independently based on the company’s innovative concepts and proposed solutions.

Insights from Extra Crunch Live

This surprising detail was revealed during a conversation with May Mobility co-founder and CEO Edwin Olson, Chief Product Officer Nina Grooms Lee, and Toyota AI Ventures founding partner Jim Adler on an episode of Extra Crunch Live.

The discussion provided valuable insights into the dynamics between startups and venture capital firms.

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Key Takeaways and Full Session Recording

Below are highlights from our conversation with Olson, Grooms Lee, and Adler.

A complete recording of the session, including a live pitch-off, is available at the end of this article for further review.

• The initial seed funding for May Mobility was secured through the strength of their ideas.
• The connection with Toyota AI Ventures came later, during a subsequent funding round.
• Extra Crunch Live provides a platform for in-depth discussions with industry leaders.

A Distinct Strategy in Corporate Venture Capital

During a recent discussion, Adler highlighted that Toyota AI Ventures employs a strategy that diverges from many conventional corporate venture capital firms. These firms are frequently perceived as prioritizing strategic synergy over substantial venture-level financial gains.

Adler explained that the organization he established under Toyota’s corporate structure, in several respects, functions more akin to a conventional venture capital firm than commonly believed.

“Our primary focus at Toyota AI Ventures is on achieving a financial return, with strategic benefits considered secondary,” he stated. “This contrasts with the typical approach of most corporate VCs, who often prioritize strategic alignment even if financial success isn’t guaranteed.”

He further elaborated that prioritizing strategic alignment without a strong financial foundation often results in partnerships that are ultimately ineffective and fail to deliver any genuine strategic value.

Therefore, a focus on financial returns is crucial for accurately assessing a company’s potential to disrupt and reshape the market.

Avoiding Common Pitfalls in Investment

Adler mentioned that initial assessments of Olson and his May Mobility concept indicated a strong business foundation with promising financial prospects. However, he also aimed to circumvent a frequent error that can arise even among intelligent and well-intentioned individuals within the same organization.

“We had a pre-existing relationship with Ed and held him in high regard, admiring both him and May Mobility,” Adler said. “However, a form of confirmation bias can subtly influence decision-making.”

He emphasized the inherently collaborative nature of the venture capital landscape.

“We adhere to a policy of requiring companies or founders with whom we have close ties to secure their initial funding round from a lead VC other than ourselves, or to exclude our participation from the first investment entirely.”

The Importance of Independent Validation

This approach ensures an unbiased evaluation of the investment opportunity.

• It encourages independent due diligence.
• It mitigates the risk of overlooking potential flaws due to pre-existing relationships.
• It fosters a more objective assessment of the company’s market potential.

By prioritizing financial returns and seeking external validation, Toyota AI Ventures aims to build a portfolio of robust, market-changing companies, rather than strategically aligned but ultimately weak partnerships.

Applying Lean Startup Methodology to Significant Obstacles

Nina Grooms Lee discussed the factors that drew her to May, particularly given her extensive background in the automotive industry and her leadership of autonomous vehicle initiatives at Ford.

The experienced leader emphasized that May’s commitment to addressing a remarkably complex technical issue with a pragmatic strategy rooted in lean startup principles was a primary attraction.

Early Product Release and Market Feedback

“A crucial aspect that immediately impressed me upon learning about May was their dedication to introducing products to the market swiftly,” she stated.

“This directly reflects the core tenets of Lean Startup: prioritize early release, ideally in a Minimum Viable Product (MVP) format. Avoid striving for perfection initially; focus on achieving sufficient functionality to facilitate rapid learning.”

This approach allows for the acceleration of a feedback cycle from the market, which can then be integrated into product development and the innovation process.

The Appeal of Data-Driven Development

Grooms Lee identified herself as someone deeply interested in product development, making the feedback loop incorporating real-world usage data especially appealing.

Furthermore, she highlighted the clear vision and objectives, alongside the positive culture fostered by Olson and his team at May, as significant influences in her decision to accept the position.

Evaluating Risk and Confirming Strategy

Olson acknowledged the inherent anxieties of launching a new venture, stating, “The prospect of beginning a company can be daunting.” He described leaving Toyota Research Institute as a move from a stimulating, though secure, position into a realm of uncertainty.

As a first-time Chief Executive Officer, this transition was particularly challenging. However, Olson emphasized his commitment to establishing May as both a sustainable enterprise and a practical answer to the challenges of self-driving technology.

A key priority for Olson was to objectively assess the potential of his startup. He deliberately avoided seeking initial funding from a specific individual, preferring instead to secure independent validation.

“I intentionally didn’t solicit investment from him initially,” Olson explained. “We engaged in numerous discussions about the startup, and I benefited greatly from his counsel. However, when the time came for fundraising, I chose not to approach him.”

He believed that obtaining external investment through rigorous pitching and convincing potential investors of the business’s core principles and market strategy was crucial. This process, though lengthy, significantly bolstered his confidence in the viability of May’s approach.

Feedback Session

During the final half-hour of the episode, Olson, Adler, and Grooms Lee provided their insights on live pitches delivered by startups chosen from the Extra Crunch Live audience.

Their evaluations offered valuable perspectives on the presented business models and strategies.