The Israel startup Innoviz Technologies, which has developed LiDAR sensors that enable self-driving cars to see their surroundings, said on Friday it would list on the Nasdaq Stock Market by merging with a special purpose acquisition company, or SPAC.
The SPAC, which is a “blank check” corporation formed to take companies public without an initial public offering, is called Collective Growth Corporation. Collective had earlier raised $150 million for the purpose of merging with a privately held company. Innoviz will not only get Collective’s $150 million but another $200 million through a so-called PIPE (private investment in public equity) investment led by Antara Capital and Perception Capital Partners.
If Collective’s shareholders approve the merger, Innoviz will begin trading on the Nasdaq under the ticker INVZ at a $1.4 billion valuation post-money. That is nearly two and a half times the nearly $600 million valuation in its last fundraising in June 2019.
By merging with a SPAC, Innoviz avoids going through the costly and complicated process of an IPO and need not reveal to the public details about its past operations, growth strategy or management in a prospectus.
In doing so, Innoviz is joining a trend that got underway on Wall Street with the onset of the coronavirus pandemic to get a listing quickly and quietly through a legal back door. According to SPACInsider, this year a record 229 companies listed for trading via SPACs – four times that of 2019 – raising a combined $77.2 billion. In the years before 2019, the annual number of SPAC listings had been in the single digits.
Innoviz’s two biggest competitors in LiDAR are also listed on the stock market through SPACs. Luminar has risen to market capitalization of $11 billion after starting to trade last week, and Velodyne trades at a $3.4 billion valuation. A third rival, AEVA, announced this month that it planned to merge with a SPAC and begin trading at a $2.1 billion valuation.
Innoviz was formed four years ago by CEO Omer Keilaf, Oren Rosenzweig, Oren Buskila and Amit Steinberg (the latter no longer with the company), who served together in Unit 81, a secret technology unit of the army’s Military Intelligence. All three will be staying in their jobs in the merged company.
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In a presentation to the U.S. Securities and Exchange Commission, Innoviz said a quarter of its research and development staff had also served in Unit 81. It noted that a host of other successful tech companies had been founded by Unit 81 alumni, including the 3D sensing startup PrimeSense and Anobit, a semiconductor company acquired by Apple in 2012.
Until now, Innoviz had raised $251 million from Israeli angel investor Zohar Zisapel and the venture capital funds Vertex, Magma and Softbank Korea, among others. None of them is selling shares in the listing process and they will collectively own 71% of the merged company. The PIPE investors will hold 14% and the public, through the SPAC, 11%. Another 4% will be held by the SPAC’s sponsors.
Innoviz employs about 280 people, all but 20 in Israel, and is regarded as one of the most prominent companies in Israeli automotive technology and a leading global player in LiDAR (Light Detection and Ranging).
LiDAR employs sensors to observe and map an autonomous car’s surroundings by way of lasers as it moves. Together with cameras and radar, LiDAR identifies obstacles and objects, such as pedestrians and other cars. Earlier this year, Innoviz unveiled a next-generation LiDAR product called InnovizTwo that will become commercially available in third-quarter 2021. The company says InnovizTwo will be 70% cheaper than its current technology and have better performance characteristics.
Because the rollout of fully self-driving cars to the market is taking longer than originally expected, Innoviz has been trying to make its technology relevant for less-fully autonomous cars, which are expected to be unveiled in the next few years. In those kinds of cars, a driver still controls the vehicle but gets automated assistance in navigation and acceleration.
Innoviz’s main technology partner, Magna International, a Canadian maker of automotive technology, is also a strategic investor. Other partners include China’s HiRain and Aptiv. Innoviz’s biggest partner in the German automaker BMW.
Innoviz forecasts revenues of just $5 million and a loss of $65 million before interest, taxes, depreciation and amortization. It expects to become profitable in 2024, by which time its revenues in its most ambitious scenario will have reached $220 million.
In the past year, Innoviz had to contend with its manufacturing partner, Jabil, shutting its Haifa facility and moving it to Germany, and the loss of founder Steinberg. Going forward, Innoviz faces several challenges, among them considerable capital and a gap of four or more years till it begins generating significant revenues.
Rosenzweig told TheMarker that the stock market listing would enable Innoviz to raise capital more easily and win support from other big automakers. “We estimate that we need $260 million to support all our operations and achieve profitability. We believe that $350 million would give us real financial strength,” he said.
In addition, the company faces strong competition in the global LiDAR market from bigger firms, such as Velodyne, with forecast revenues of $101 million this year. Rosenzweig says Innoviz’s edge over competitors is that it set out to be a self-driving vehicle company.
“From the start, we took the Mobileye approach and focused on working with traditional automakers and Tier 1 partners,” he said. “We differentiated ourselves by targeting the private car market, unlike our competitors who started out in shared transportation, like shuttles and robotic taxis. Now that it’s clearing that the big market for LiDAR is the private car, they’re making the change.”