The startup Lidar goes public and turns its founder into a billionaire

Luminar founder Austin Russell became one of the youngest self-made billionaires after his lidar company made its public market debut Thursday. Russell, 25, was just 17 when he founded Luminar in 2012. Shares of Luminar exceeded $ 30 a share on Friday, a massive 43% gain for the day on top of Thursday’s big gains.

Luminar has become one of the leading companies in the fast growing lidar industry. Automakers are expected to start offering lidar as an advanced option for their vehicles over the next several years to enable better driver assistance technology. Right now, lidar companies are trying to win contracts to supply these sensors.

Luminar scored a major victory in May by signing an agreement with Volvo to supply lidar sensors for vehicles starting in 2022. It was one of the first such agreements in the industry.

More recently, Luminar entered into an agreement to supply lidar sensors to Mobileye, the Intel subsidiary that supplies many camera-based driver assistance systems in cars today. Luminar provides sensors for Mobileye’s standalone prototypes, not production vehicles, so that wasn’t a big deal on its own. But if Mobileye does eventually develop its next-generation technology around Luminar’s lidar – far from a sure thing – it could lead to many Luminar lidar sales going forward.

While industry leader Velodyne has traditionally manufactured 360 degree rotational units designed to sit on the roof of a vehicle, Luminar’s sensors are clamped in place and cover a 120 degree horizontal field of view. in front of a vehicle.

Long range is considered essential for advanced autonomous driving systems, and Luminar claims its lidar has a peak range of 250 meters. One of the reasons for this is that its lasers are operating at an unusual frequency. Most lidar sensors operate at around 900nm, largely because lasers and silicon-based sensors perform well around this frequency. However, 900nm lasers are subject to strict power limits as they can damage the human retina.

In contrast, Luminar operates at 1550 nm. Fluid in the human eye is opaque to light at this wavelength, greatly reducing eye safety concerns. As a result, Luminar can pump much more power into its lasers and therefore achieve a longer range. A major drawback of 1550nm lasers, however, is that they require the use of more exotic semiconductors like indium gallium arsenide which tend to be more expensive. But Luminar says it figured out how to sell its sensors for less than $ 1,000 in volume.

The big question for Luminar is whether it can achieve this. When Luminar released its financial results before the merger this week, it revealed that it plans to sell 0.1 thousand – or about 100 – lidar sensors in calendar year 2020. To justify its multi-billion valuation of dollars, the company is going to have to figure out how to produce tens of thousands of units while still hitting that target of less than $ 1,000.

PSPCs have a good time in the EV and lidar sectors

Luminar went public through a merger with a Special Purpose Acquisition Company (SPAC) – a financial vehicle that helps startups bypass some of the complexity and red tape of a traditional IPO. Instead of offering its shares directly to the public, Luminar merged with a company called Gores Metropoulos which had previously been formed with the aim of finding a startup to go public.

This year has seen a boom in PSPC-based transactions. Luminar’s rival Velodyne went public via a SPAC in September. The company’s share price has seen only modest gains since the deal was announced. Another lidar maker, Innoviz, is reportedly considering a SPAC merger.

Little-known electric vehicle maker Lordstown Motors went public through a SPAC in October and was greeted enthusiastically by investors. Just like another manufacturer of electric vehicles, Fisker. Another electric vehicle company, Canoo, announced a PSPC deal in August.

Skeptics fear this alternative process will allow companies to opt out of due diligence steps that help protect retail investors from fraud.

These concerns were underscored when future hydrogen-powered truck maker Nikola went public via a SPAC merger in June. A few months later, the public learned that the company’s first product, a semi-truck called Nikola One, had never been functional, despite claims by founder Trevor Milton. Milton was forced to resign and Nikola’s value is well below the peak it reached shortly after the company went public. Anyone who bought Nikola shares in the first few days of trading has lost most of their money.