The chief executive of autonomous vehicle developer Aurora Innovation presented a swath of cost-cutting and cash-generating options to its board, ranging from a hiring freeze and spinning out assets to a small capital raise, going private and even selling itself to high-profile tech companies Apple and Microsoft.
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The ideas, all aimed at shoring up its cash position and extending its runway in tough market conditions, were laid out in an internal memo first reported by Bloomberg and also viewed by TechCrunch. The internal memo, which was intended for the board ahead of its August 3 meeting, was mistakenly sent to all Aurora employees, which today numbers around 1,600 people.
Following the Bloomberg report, Aurora shares jumped as much as 27%. Shares closed up 15.17% to $2.43.
Aurora has a “cash runway” that will allow it to continue operations through mid-2024, according to its second-quarter letter to shareholders and noted in the memo. However, Aurora is still a pre-revenue company. And the memo written by co-founder and CEO Chris Urmson acknowledged a two-fold problem: a challenging financial market that makes it difficult to raise additional capital and shifting timelines by its OEM partners that delays revenue.
Aurora, which has prioritized commercializing self-driving trucks, has pilot partnerships with FedEx, Paccar, Schneider, Werner and Xpress.
Aurora held a board meeting after the email was shared. An Aurora spokesperson declined to comment on what was discussed during the meeting. The company did provide an emailed statement stating,“Given the current macro conditions, every company should be going through the exercise of evaluating its options and long-term strategy. We think that thinking through things like this is a positive sign and a mark of good governance.”
Urmson noted that market conditions make it unlikely that the company could raise $1 billion. Instead, he laid out a long list of options — each one noting pros and cons as well as his biggest concern of maintaining employee morale — and said there was value in finding a “path to raise $300 million in the next year to add around six months to our runway.”
Buzzy startup to SPAC
Aurora went from buzzy startup to publicly traded company-via-SPAC in a span of four years. The company was founded in 2017 by Sterling Anderson, Drew Bagnell and Urmson, all whom have a history of working on automated vehicle technology.
The three co-founders, who hailed from Google’s self-driving project, Uber ATG and Tesla, helped attract high-profile investors and a stack of capital.
Aurora’s co-founders doubled down in December 2020 when they reached an agreement with Uber to buy the ride-hailing firm’s self-driving unit. The complex deal that at the time valued the combined company at $10 billion helped Aurora double the size of its workforce.
Under the terms of that acquisition, Aurora did not pay cash for Uber ATG. Instead, Uber handed over its equity in ATG and invested $400 million into Aurora. Uber received a 26% stake in the combined company, according to a filing with the U.S. Securities and Exchange Commission.
Aurora made at least one other acquisition following the Uber deal. In February 2021, Aurora bought OURS Technology, the second lidar startup it had acquired in less than two years. Aurora acquired Blackmore, a Montana-based lidar startup, in May 2019.
Against that backdrop, dozens of startups across industries that were keen to unlock more capital turned to mergers with special purpose acquisition companies. These SPAC mergers offered a quicker, yet often more costly, path to the public marketplace.
Aurora jumped on the SPAC train, announcing in July 2021 that it would go public via a merger with Reinvent Technology Partners Y, a special purpose acquisition company launched by LinkedIn co-founder and investor Reid Hoffman, Zynga founder Mark Pincus and managing partner Michael Thompson.
A year later, the promises of what a high-flying public marketplace could offer has come back down to earth, forcing frontier tech companies like Aurora to find ways to extend their capital runways long enough to reach commercialization.