Some high-profile startups developing technologies to see or drive better than humans do are selling shares at an opportune time.
Lidar sensor startup Innoviz went public last week by merging with a special-purpose acquisition company. Self-driving truck startup TuSimple Holdings Inc. is set to start trading this week through a traditional stock offering with a valuation of more than $8 billion. And an even bigger auto tech debut may be coming yet this year: Argo AI, the self-driving startup backed by Ford Motor Co. and Volkswagen, is weighing a public share sale.
The timing is right for such offerings, experts said. The stock market is at a record high. Investors hoping to find an undervalued gem are eager to take their chances on startups, and one of the hottest sectors is automotive, especially where electrification, digitalization or automated driving are involved.
"If you're an EV company or any kind of automotive technology company, you frankly could not have picked a better time to go public than the past couple of quarters," said Asad Hussain, a mobility analyst at PitchBook, of Seattle, a venture capital research and data provider.
The COVID-19 pandemic, with its emphasis on personal space and risk mitigation, has sparked investors to consider how fundamentally transportation may be transformed in the next decade or so. Many see startups as key to that shift — and the chance for a big return — Hussain said.
One of the keys will be finding ways for cars' computers to "see" the road, vehicles, people and other objects. One promising technology is lidar, which emits laser beams and measures the time it takes for the light to be reflected back. A number of lidar companies — perhaps more than the market can ultimately support — are battling for funding and customers.
Innoviz, of Tel Aviv, Israel, is a developer of lidar sensors for use in self-driving vehicles. It went public Tuesday, April 6, after merging with blank-check firm Collective Growth Corp.
Innoviz started supplying BMW in 2019, and its second-generation lidar goes into production next year.
Another competitive, high-stakes segment is autonomous trucking. TuSimple in March announced plans to go public, and last week it said it aims to sell 34 million shares and raise about $1.3 billion. It will be the first major initial public offering by a pure-play autonomous driving company, Hussain said, and the market response will be a test of whether investor enthusiasm for electric vehicles can carry over into automated driving.
TuSimple has a partnership with ZF, the world's fifth-largest supplier, according to the Automotive News Research & Data Center, and both are partners with chipmaker Nvidia, which has significant artificial intelligence capabilities.
Top officials at Argo AI, a leading self-driving startup, are looking to boost funding as they get closer to commercializing the company's technology, Bloomberg News reported, citing unnamed people familiar with the plans.
Argo AI, led by CEO Bryan Salesky, already received strategic investments of $1 billion from Ford in 2017 and $2.6 billion from VW in 2020, $1.6 billion of which was in the form of Audi's automated driving division.
It wasn't clear whether Argo AI will opt for an IPO or merge with a special-purpose acquisition company, the sources said, adding that plans could slip into 2022.
In either case, the relationships with Ford and VW put Argo AI at an advantage relative to other startups, said Eric Weidemann, vice president of SPACInsider.com.
"Having the partnership with the giant OEMs is going to be very helpful, too, as far as resources and funding," Weidemann said.
The large number of startups going public raises the risk that one or more will fail.
Those dealing with autonomous vehicle tech and lidar could encounter unprecedented challenges, both financial and operational. Autonomous tech is complicated to manufacture, while the market may be oversaturated with lidar startups.
While Hussain, the PitchBook analyst, is optimistic in general about auto tech, "for sure not all of these companies are going to survive," he said.
Reuters and Bloomberg contributed to this report.