Can the Simulation Software sector blow up in the US?

This past week has been busy with few big announcements in the simulation software sector. Starting with NVIDIA CEO Jensen Huang’s GTC Keynote yesterday where he demoed NVIDIA Ominiverse building a simulated warehouse with just a text prompt. And earlier last week Applied Intuition, a software supplier for autonomous vehicles, just raised an enormous $250 million round at a $6B valuation. With NVIDIA’s Omniverse catching up, Applied remains the leader in a sector dominated by only a few players.

What’s also interesting is the fact that North America commands a 36% share in the global simulation software market, primarily due to the ease of employing a highly skilled workforce and raising funds as demanded due to complexity of the product and high initial development and deployment costs.

We did a deep drive into the simulation space by analyzing over 100 of the top performing companies and compared various metrics to paint a complete picture of the sector.

Here’s our analysis:

With over 45% Year over Year growth, Applied Intuition sits on the top of the charts in terms of employee growth. Founded in 2017 by YC Group Partner Qasar Younis, the company powers software for companies that are trying to create autonomous vehicles and equipment – it allows the vehicles and equipment to run through various simulations/scenarios so it can learn how to operate independently. 

The market that the company is attacking is expected to grow rapidly as more and more vehicles and equipment become autonomous. 

Upon comparing the employee count from almost a year ago with the most recent employee count, we can see that Applied Intuition has had the highest spike over the last year. This is very impressive considering they already started off with the highest absolute number.

Simulation products are extremely engineering heavy. We dove into Crustdata to see which % of employees were titled as engineers. Some of these companies that we analyzed have 7 out of every 10 employees as engineers. 

The norm seems to be that just over half of simulation company employees are titled as engineers. This is a bit higher than what we see with most other tech startups, where typically the engineering team constitutes anywhere between 16-37% of the total headcount.

While most of the top simulation companies we analyzed were based in the US, some of these companies have their largest headcount cohort outside of the US. 

Colombia and Mexico are becoming hotbeds for not only outsourced engineering, but now design, product management, and operations roles. 

To date, only a French company named Balyo has gone public from this sector and has since entered into 2 global partnerships and opened up subsidiaries in Boston and Singapore to service clients in the Americas and Asia-Pacific.

Most of the companies are at a Series-B stage, suggesting that they have found product market fit and some will be primed to be either acquisition targets or going public in the next 5 years. One company to keep an eye on would be PassiveLogic which is building an autonomous platform for buildings. It has raised $80M in funding and is growing its headcount at 32% YoY. 

However, the fact that there aren’t many Seed and Series-A companies might hint at two things: 1. There might not be a ton of innovation happening in the space or  2. The sector isn’t ripe for disruption with the top few companies already moving forward, corroborating our assessment made earlier in the piece or 3. The funding slowdown is hurting deeper tech companies.”

With a whopping $1.33B in funding, California based Pony.ai is a startup that builds end-to-end autonomous driving solutions.

Growing at a CAGR of 12.4% & expected to more than double and hit $27+B by 2030, the simulation software sector will be an interesting one to watch out for, especially with the rapid advancement in AI – leading to endless use cases for softwares to build autonomous systems or other applications in programmable robotics.

Also with tech giants like Uber and Meta betting big on autonomous driving and spatial computing, many of these mid-stage (Series-B or later) simulation software companies might get strategically acquired in the next few years. 

About the data

The data seen above is from Crustdata - the most accurate headcount and founder data for private companies, pulled realtime. It indexes billions of public data points on companies every week to provide an edge over the private market.