Within Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) "other bets" segment, autonomous driving business Waymo is among the most prominent, as well as the oldest. The experimental project was first created in 2009 and spun off from Google back in 2016 to operate as an independent company under the parent holding company.

Developing self-driving cars is incredibly capital intensive, and Waymo needs more cash.

Waymo Via truck

Image source: Waymo.

Auto heavyweights are coming along for the ride

This week, Waymo announced that it had closed its first external investment round, raising $2.25 billion in fresh capital at an undisclosed total valuation. The funding round was led by private equity firm Silver Lake Partners; the Canada Pension Plan Investment Board; and Abu Dhabi's sovereign wealth fund, Mubadala Investment Company. Other investors include automotive supplier and contract manufacturer Magna International (NYSE:MGA), car retailer AutoNation (NYSE:AN), venture capital firm Andreessen Horowitz, and Alphabet itself.

That list includes some prominent players in the automotive industry, an important sign of validation for both Waymo's broader mission and its technological progress. Having those heavyweights on board will add to the company's reservoir of technical expertise while providing deeper insight into other parts of the industry. Waymo did not disclose what stakes each investor secured, but it seems that Alphabet played a smaller role in the funding round. AutoNation disclosed that its investment was a relatively small $50 million.

"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," Waymo CEO John Krafcik said in a statement. "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."

Waymo operates an autonomous ridesharing service, Waymo One, in Arizona and announced its new Waymo Via offering, which extends the technology to large Class 8 semi trucks for commercial cargo delivery applications.

Bringing in outside investors

While moonshot start-ups are incubating within X, Alphabet foots the bill. As those companies graduate to become stand-alone companies, Alphabet has been increasingly turning to external investors for capital. Alphabet's life sciences unit had similarly raised $1 billion in an external funding round in early 2019 (also led by Silver Lake). Molten salt energy storage start-up Malta graduated out of X in December 2018, at which point it was spun off as an independent company outside of Alphabet with a $26 million Series A funding round.

Alphabet CEO Sundar Pichai recently hinted at the move. "Verily is an example of a company in the portfolio that has outside investors, Silver Lake and Temasek, as well as its own board," the chief executive said last month. "We'll consider opportunities for some of our other bets to take similar steps over time."