Joby Aviation is close to a deal to go public via a merger with blank-check company Reinvent Technology Partners (NYSE: RTP) in a deal that will value the eVTOL developer at $5.7 billion, according to the Financial Times.
Reinvent Technology, a special purpose acquisition company (SPAC) formed by LinkedIn founder Reid Hoffman and Zynga founder Mark Pincus, holds $600 million in trust to be invested in the target company in combination with an expected private investment in public equity (PIPE). Sources familiar with ongoing conversations expect the total investment in Joby to be between $1-1.5 billion.
Less than two months into 2021, the nascent eVTOL industry appears to have eclipsed the previous year’s fundraising haul. On Feb. 10, Archer announced it will merge with Atlas Crest Investment Corp. (NYSE: ACIC) at a $2.7 billion valuation that will net the company $1.1 billion in proceeds. Archer also announced an investment and $1 billion tentative purchase agreement from United Airlines — despite not yet revealing a full-size aircraft prototype.
More nine- and 10-figure deals are expected to close in the coming weeks, people familiar with ongoing financial discussions tell eVTOL.com.
Lilium is in talks with SPACs, most notably Qell Acquisition Corp (NASDAQ: QELL), according to multiple sources, with a deal likely in the next few weeks. The German air taxi-maker was previously reported as in talks with Zanite Acquisition Corp (NASDAQ: ZNTE).
Volocopter, the other major German eVTOL developer, is also said to be in talks to go public via a reverse merger. Company CFO Rene Griemens previously told eVTOL.com that he considered SPACs to be a “great financing option for our industry.”
Former Boeing chief executive Dennis Muilenburg was named as chairman of New Vista Acquisition Corp., a SPAC with $200 million in assets seeking an emerging aerospace company developing eVTOL aircraft or related technology.
All told, close to $2 billion in committed SPAC funds are currently searching for acquisition targets in the eVTOL and urban air mobility space, sources tell eVTOL.com.
Stocks for public eVTOL and urban air mobility companies, following the high level of interest in Tesla and other electric vehicle developers seen last year, have skyrocketed in recent months.
Blade Urban Air Mobility, which in December announced plans to merge with blank-check company Experience Investment Corp. (NASDAQ: EXPC), is up 60 percent from before the announcement. ACIC, Archer’s SPAC partner, jumped more than 25 percent after its acquisition announcement.
Chinese developer EHang, which claims to be providing limited services on mainland China and is a participant in numerous European airspace study projects, has seen its stock rise almost ten-fold since October, valuing the company at almost $6 billion at the time of this writing.
Investors, founders, and other members of the industry are divided on whether SPACs are a positive development for the industry. Access to vast amounts of capital is a key ingredient for a successful aircraft development project — particularly aircraft with as many novel features as electric tiltrotor or vectored thrust eVTOLs like Lilium, Joby, and Archer are developing.
But a public listing may also increase a company’s exposure if things don’t go according to plan — as is often the case with complex aircraft development programs. Today, investors appear willing to fund early-stage companies in many sectors — space tourism, biotech, battery technology, and now urban air mobility — that are likely half a decade away from generating significant revenue.
That may change. And if it does, eVTOL developers could find it difficult to raise additional capital if they need it. The incentive structure of a public company — beholden to quarterly reporting and shareholders that often care less about long-term success — may be less aligned with the time horizons inherent in urban air mobility than strategic investors or venture capitalists specifically oriented toward this sector.
With distributed electric propulsion opening a new set of opportunities for aviation and aircraft design, it is not surprising that more than 200 companies are developing eVTOL aircraft in pursuit of various market applications. Access to easy money from Wall Street means many of these companies may even be able to bring a product to market — perhaps more than analysts have predicted in recent years.
The broad strokes of this movie have played out before; in the early 20th century, hundreds of automobile companies identified the coming opportunity and competed for a slice of the market. A few succeeded and many did not.
As a similar pattern plays out in the eVTOL space, how will the results — and the consequences for failure — differ with so many players choosing to go public while still developing an aircraft prototype?
Only time will tell.
