Aurora SPAC: Everything you need to know about Aurora

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By :  ,  Financial Writer

Aurora SPAC: What do we know about the Aurora SPAC?

The Aurora SPAC will see the self-driving technology business Aurora Innovation merge with blank cheque company Reinvent Technology Partners, which is already listed on Nasdaq.

The transaction could raise $2 billion for Aurora and potentially will mean a valuation for the combined company of $13 billion.

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How much is Aurora worth?

Aurora would reportedly be worth an estimated $11 billion if all goes to plan with the SPAC and its $2 billion fundraising, with a value of $13 billion for Reinvent Technology Partners and Aurora Innovation combined. The valuation takes into account the $977.5 million cash contribution from Reinvent’s trust account and a $1 billion contribution from the PIPE (private investment in public equity) fund composed of contributions from third-party investors.

Prior to the transaction, the value of the business is difficult to ascertain based on the exact details of the ownership structure not being in the public domain, not to mention the company’s pre-revenue position.

What does Aurora do?

Aurora Innovation is a Pittsburgh, US-based technology company with a focus on self-driving ‘Level 4’ vehicle technology, for which routes are pre-programmed and a human is not required. The company’s flagship product, the Aurora Driver, is an autonomous driving system designed to work on a range of automobiles, from tractors to sedans.

The company was started in 2016 by Chris Urmson, a former Chief Technology Officer at Alphabet’s self-driving product now known as Waymo, along with Drew Bagnell and Sterling Anderson, who formerly headed up driverless technology initiatives at Uber and Tesla respectively.

The company established early partnerships with the likes of Volkswagen and Hyundai to develop and test its self-driving system. On the back of the founders’ technical experience, the company was able to raise a Series A round of funding in 2018 to the tune of $90 million, led by Greylock and Index Ventures. Reid Hoffman, founder of LinkedIn and partner of Greylock, joined the board following the raise, as well as Index partner Mike Volpi.

In 2019 the company raised a further $530 million in a Series B round led by Sequoia Capital, and acquired lidar (remote sensing) company Blackmore the same year. The acquisition assisted with the application of light detection for measuring distance, forming a critical component of the Aurora technology. 

The following year, Aurora acquired Uber’s self-driving unit as part of a strategic partnership that also involved Uber purchasing a $400 million stake in the company.

Today, the company continues to develop its proposition and is pre-revenue. Aurora employs more than 1,600 people as of August 2021.

Who are Aurora’s competitors?

Aurora’s main competitor is widely regarded as Waymo, which is considered to be the longest-standing player in vehicle automation technology, as well as the first to launch autonomous rides when it premiered its driverless service in 2020. Other rivals include Tusimple, which is heavily backed by Chinese investors, and Embark, which is seeking its own multi-billion dollar listing later in 2021.

In terms of traditional automakers, Ford is planning to introduce a hands-free driver assistance feature called Active Drive Assist, while General Motors unveiled the Cadillac Personal Autonomous Vehicle concept in January 2021.

How does Aurora make money?

Aurora will make money through supplying and collaborating with automobile manufacturers in relation to the installation of its self-driving technology. However, the company doesn’t expect to see any income materialise until 2023 at the earliest.

What is Aurora's business strategy?

Aurora’s business strategy so far has been marked by strategic acquisitions such as Uber’s self-driving division, in a bid to eventually introduce Aurora’s self-driving cars to Uber’s ride hailing platform, as well as the Blackmore acquisition to help develop its own lidar system.

The company’s various other partnerships have been crucial to its growth, such as the relationship with truck manufacturing giant PACCAR that will enable the development of Aurora’s driverless truck. Aurora has also partnered with Toyota and Denso in a bid to establish self-driving taxis.

For all the company’s partnerships and strategic synergies, it has yet to put forth a comprehensive business model for investors to scrutinise. In an industry riven with monumental technical challenges, lengthy product testing, missed deadlines and scary burn rates, market speculators will be keen to see concrete plans for the business emerge as possible.

Is Aurora profitable?

Aurora is not profitable and does not expect to be before 2027, three years after it expects to deliver its self-driving truck product. According to reports, the company piled up losses of $214 million in 2020 and $94 million in 2019 as it continues to ratchet up development costs, as well as pay its 1,600 employees.

Who owns Aurora?

The ownership of Aurora is split between the co-founders and various venture capital and private equity institutions including Sequoia Capital, T. Rowe Price and Lightspeed Venture Partners, as well as Uber, which took 26% of the company for a $400 million stake in 2020.

Directors of Aurora

Chris Urmson – Chief Executive Officer/Co-Founder

Drew Bagnell  – Co Founder/Chief Technology Officer

Sterling Anderson – Co-Founder/Chief Product Officer

Colette Bridgman – VP, Marketing

Alan Ghelberg – VP, Strategy

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