Self-driving startup Aurora will go public via merger
Self-driving startup Aurora has announced plans to go public through a merger with Reinvent Technology Partners Y, a special purpose acquisition company.
Also known as a SPAC, these types of companies raise capital through an initial public offering for the purpose of acquiring or merging with an existing company.
For Aurora, the deal will secure funding for the commercialization of its self-driving technology through testing, development, deployment and hiring. It is planning to launch its autonomous technology, also known as the Aurora Driver, first in the trucking industry before expanding to delivery and ride-hailing markets.
Aurora is expected to have $2.5 billion in cash at closing, officials said in a Thursday news release. It raised nearly $2 billion from the transaction, including from partners in the industry like Uber, Volvo Group and trucking manufacturer PACCAR.
The merger represents an equity value of $ 11 billion for Aurora.
“Our goal at Aurora is to make the movement of goods and people more equitable, productive, dependable and — crucially — much safer than it is today,” said Chris Urmson, the co-founder and CEO of Aurora. “By combining with Reinvent and with this incredible group of investors, we are even closer to deploying self-driving vehicles and delivering the benefits this technology offers the world.”
Reinvent Technology Partners Y, which closed its initial public offering in March, takes a “venture capital at scale” approach, company officials said. In other words, it wants to offer the same financial support and value to public companies that venture capitalists offer private businesses.
The SPACs founders include Reid Hoffman, who founded LinkedIn, co-founded PayPal and was one of the earliest investors in Facebook, as well as Mark Pincus, who founded the social game developer Zynga.
Reinvent had been a private investor in Aurora prior to this transaction, officials said in an investor call Thursday. Mr. Hoffman was a founding investor and member of Aurora’s board. He was not involved in discussions about this transaction and is expected to remain on the board.
“From a public market standpoint, we think that Aurora will be a truly unique opportunity for public market investors to bet on the future of self-driving against all categories in transportation from trucking to passenger to delivery,” Mr. Pincus said.
The investments from this transaction mean Aurora will be funded “through commercialization of the trucking opportunity and positioned to leverage this same solution for the even bigger passenger and delivery market opportunity,” he said.
The markets that Aurora is hoping to capture — global trucking, last-mile delivery and ridehailing — together amount to a $9.4 trillion industry, the company estimates.
Right now, Aurora is in the “develop and refine” stage for both its trucking and ride endeavors, according to a presentation for investors released Thursday. It is planning to launch its first product, a self-driving truck, in late 2023 in Texas. It plans to launch autonomous rides in 2024 or 2025.
For the first one to two years, the company will own and operate its own fleet of vehicles but, long term, it plans to offer its technology as a service. In other words, it will provide the tech and external
partners will own and operate the fleet.
Aurora will take on the cost for things like insurance, hardware maintenance and telecommunications and bring in revenue through a fee charged per mile.
It expects to start generating revenue from a fleet of 20 trucks that it will own and operate by late 2023 and to break even by 2027.
Aurora reported net losses of $214 million in fiscal year 2020 and $94 million in 2019.
Upon closing the proposed transaction, the combined company will be called Aurora Innovation Inc. and will be listed on Nasdaq under the ticker symbol AUR. The transaction is expected to close in the second half of 2021.
Aurora has about 1,600 employees after its January acquisition of Uber’s Advanced Technologies Group, its self-driving division that previously had headquarters in the Strip District.
Founded in 2017, Aurora tests its self-driving vehicles on Pittsburgh streets in Lawrenceville and the Strip District. It also has offices in the Bay Area; Dallas; Seattle; Bozeman, Mont.; Louisville, Colo.; and Wixom, Mich.
“The last few years have really been about investing in that foundational technology, making sure we understand this and we understand how to deliver a scalable, commercializable product,” Mr. Urmson said during the investor call. “The next couple of years are really about heads down, let’s take that amazing technology, that amazing group of people we have, focus it, harden it and get it out in the market and actually create something useful for the world.
“Through that, we will see those social benefits and societal benefits we’ve been talking about, and we’ll create immense amounts of value for our shareholders.”