SpaceX Veterans' Parallel Systems Raises $100M to Push Autonomous Freight Rail

The Series C round was led by AVP, with participation from Hillspire, Agility Global, Cobalt Capital, Anthos Capital, Congruent Ventures, Riot Capital and Collaborative Fund. The company said the money will go toward scaling production of its third-generation vehicle, the Panther, and speeding its commercial rollout.

The Panther carries several tons of freight as far as 500 miles without an operator. The vehicles can run individually or in platoons, which tend to be shorter than typical trains, and they use no mechanical couplers, instead forming uncoupled platoons that can split apart at a rail yard without human intervention. Once a Panther is cleared to operate on a stretch of track, onboard sensors monitor the rails for obstacles ahead. Because the vehicles run on rails, they do not add to road congestion, and because they are battery powered, they do not emit exhaust pollution.

Matt Soule, co-founder and CEO of Parallel Systems, started the company in 2020 with his co-founders after years at SpaceX designing rocket avionics systems. He told TechCrunch that the technology is aimed at a gap the railroads have left open. "Less than 500 miles is hard for railroads to do competitively," Soule said. "Our technology allows them to take some of that trucking, and it's for the public's benefit."

The railroad industry was among the first to change how the world worked with technology, but according to TechCrunch, recent innovation in freight railroading has amounted to little more than longer and longer trains. Under the prevailing strategy known as precision railroading, investor pressure has driven railroads to build longer trains and run them on fixed schedules so that costs such as labor can be spread across more freight. That approach has led many railroads to abandon shorter routes, ceding part of the $1 trillion surface freight market to trucking companies. Roughly 60% of freight trips in the United States are under 500 miles, and trucking companies handle most of them.

Diesel prices have reached record highs, and at least 16 trucking companies went bankrupt over a few weeks, leaving a hole in the market that Parallel is positioning itself to fill. Even so, trucking companies have shown interest in the startup's vehicles, according to TechCrunch. Drayage companies, which move freight short distances, make money for each load they deliver but cannot charge more when a truck is stuck in traffic, even at ports where congestion is common. By moving freight closer to a customer's door, Parallel allows trucking companies to make more deliveries per day. "They want certainty, they want to be able to move," Soule said.

Soule pointed to the Port of Savannah in Georgia as evidence of the strain on road freight. "If you ever go to the Port of Savannah, you see the truck lines coming in and out of the port. It's insanity," he said. Parallel received approval a year and a half ago from the Federal Railroad Administration to operate near that port, where it has been running on 160 miles of track to prove the safety of its system. "We've been verifying all the safety controls and operating practices that are best evaluated in a real-world setting with a path toward our first commercial payload coming up very soon," Soule said.