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Autonomous driving tech startup Aurora, which was founded by the former head of Google’s autonomous vehicle program, is the latest company to announce its IPO by merging with a special purpose acquisition company (or SPAC ). The deal will give Aurora about $ 2 billion in new cash when it closes, which will help the startup in its quest to become a provider of self-driving hardware and software to companies in the trucking and transportation industries.
Aurora merges with a SPAC called Reinvent Technology Partners Y, already listed on the Nasdaq stock exchange and led by LinkedIn co-founder Reid Hoffman, Zynga founder Mark Pincus and investor Michael Thompson). This trio is also in the process of making public the electric aircraft start-up Joby Aviation with another Reinvent SPAC.
Founded in 2017, Aurora has a short history. But its leaders have extensive and diverse experience with autonomous vehicles. Chris Urmson, who designed Google’s autonomous car project before it was turned into Waymo, started plotting Aurora in 2016. He eventually recruited Sterling Anderson, who was the head of the autopilot team. of Tesla until he resigned over disagreements over Elon Musk’s push to announce that the company’s cars would be capable of “fully autonomous driving.” Urmson also brought in Drew Bagnell as a co-founder. Bagnell had been a self-employed engineer at Uber after the tech company poached him from Carnegie Mellon (as part of a much larger raid of the university’s much-vaunted robotics division).
Since then, Aurora has developed the hardware and software necessary to enable vehicles to drive themselves – a set of technologies he calls the Aurora Pilot. The startup has already made deals with companies like Uber, Toyota and Volvo to use the Aurora pilot. Aurora also bought out Uber’s entire autonomous driving division late last year.
The deal with Reinvent SPAC will value the stand-alone start-up at $ 11 billion and is expected to be concluded in the second half of 2021. Just under $ 1 billion will come from PSPC itself, while the other billion dollars will come from a consortium of investors that include Uber, Volvo, and PACCAR (a trucking company Aurora also has a deal with), as well as T. Rowe Price, Fidelity, Sequoia Capital and others.
Aurora said in presentations and documents released Thursday that it plans to have trucking customers start using the Aurora pilot without humans behind the wheel by the end of 2023, and in transport vehicles at the end of 2024.
Aurora expects to lose money until at least 2027, which is why the PSPC merger is crucial. The next two or three years are going to cost Aurora dearly, as it continues to prove its technology to the point where it can start making money selling it to other companies. Aurora lost $ 214 million in 2020 (of which $ 179 million was spent on research and development), and that cash consumption has only accelerated since, with the startup losing $ 189 million over the course of the year. only first quarter of 2021 (with $ 159 million spent on R&D in the quarter). Aurora suggested to investors that investing the money in such expensive technology is worth it, as the startup believes the autonomous vehicle industry will be dominated by very few players. In one slide, he compares the self-driving industry to the digital advertising duopoly owned by Facebook and Google.
The deal announced Thursday is just the latest in a growing series of PSPC mergers in the broader transportation sector, resulting in huge infusions of cash into startups in need of cash. . Faraday Future is expected to start trading on the Nasdaq next week as part of a deal that will net electric vehicle startups $ 1 billion in fresh cash. Lucid Motors will bring in an astonishing $ 4.4 billion when it goes public shortly thereafter. LIDAR companies like Luminar, Velodyne and AEye also went public by merging with PSPC.
Not all offers have gone well. Some startups have struggled to undergo the scrutiny of being publicly traded, such as Lordstown Motors, whose CEO has previously resigned following an investigation into false statements he made about pre-orders. Velodyne is already engaged in a legal battle with its own founder, who was ousted from the board as a result of the merger. Electric vehicle startups like Lordstown Motors, Canoo, and Nikola are all under federal investigation.
At the very least, Aurora’s founders can’t sell shares for four years, and some of the PSPC executives have agreed to similar terms, as a sign of commitment to making it happen.
Stand-alone startups hadn’t jumped into the SPAC fray until now. But that can change. In addition to Aurora, another autonomous vehicle startup, Argo AI, is said to be in talks to go public as part of a SPAC merger.
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