A legal dispute initiated by a group of early investors in Volocopter continues, with the group still hoping for an out-of-court settlement by early 2023.
In an interview with Vertical, one of the early investors in Volocopter sheds light on the dispute which stems back to 2013 — two years after the company was established.
At the time, Volocopter had just raised €1.2 million (US$1.3 million) over a span of two days, using a German crowd investment platform called Seedmatch.
“I was one of 750 investors of that campaign who could invest amounts between €250, like myself, and up to €10,000 as a profit-participating loan,” said Christian Dindorf.
The contract, Dindorf said, “promised us to participate in the success of the company, but at least would give us 1% per annum interest on our investment.”
Dindorf added that at the time, the group had estimated Volocopter to be valued at about €6.7 million (US$7.1 million).
In November, Volocopter raised an additional $182 million in the second signing of its Series E funding round, which included new investors NEOM — the Red Sea’s smart, cognitive region project — and GLy Capital Management of Hong Kong. Volocopter expected this funding to see the company through the certification of its VoloCity eVTOL aircraft.
With this funding in place, Dindorf and his colleagues now put Volcopter’s valuation “well beyond €1.5 billion [US$1.6 billion].”
SPAC speculation
Backing up to early 2021, rumors had surfaced about possible plans for Volocopter to go public through a merger with a special purpose acquisition company (SPAC), a corporation formed for the sole purpose of raising investment capital through an initial public offering (IPO).
Meanwhile, according to the contract between early investors and Volocopter, the eVTOL company was entitled to terminate their agreement by Dec. 31, 2021, paying investors 1% interest per annum and their original money back. But with rumors of the SPAC deal circulating, the group sent an open letter to Volocopter, asking for a better deal.
Dindorf said “in mid-2021, [Volocopter] informed us they were indeed working on a SPAC deal and wanted to convert our original investment [loan] into actual shares as part of the SPAC deal.”
Dindorf claims that the calculations made during that time showed early investors that a valuation of roughly €1 billion would equate to a 40-fold increase in their original investment.
The vast majority of the crowd investors signed this additional agreement with the provision that the IPO would need take place by Dec. 31, 2021.
“Otherwise,” Dindorf said, “we would just get our 1% interest and our money back … At the time, the likelihood of this SPAC deal to take place looked very real, and we were all excited to be part of something like this, which is normally not imaginable for a private person.”
Helena Treeck, Volocopter’s public relations lead, told Vertical that “due to the rapidly deteriorating market environment, an IPO via SPAC did not materialize.”
Volocopter made the decision to cancel its SPAC in November 2021. Treeck said “the lenders received the money and interest back according to the contracts signed in 2013.”
Legal counsel
Dindorf and others of his group were not happy with this development, sending a letter to Volocopter in October 2022 asking for a fairer return on their early investments.
About 250 of the original 750 early investors also retained Lutz Tiedemann, a lawyer in Hamburg, who, according to Dindorf, recently won a ruling “at a higher regional court … against another startup that was funded through the Seedmatch platform with the very same blueprint contract as with us with Volocopter.”
Tiedemann is preparing to bring this case to court, and plans to also submit a complaint to “BaFin,” which Dindorf describes as a sort of German counterpart to the U.S. Securities and Exchange Commission, for what the group calls “a forbidden deposit business — that is, our original investment with the blueprint contract from Seedmatch.”
Dindorf claims that Volocopter’s counsel recently requested his group make a proposal on how to resolve the dispute. His group had suggested that Volocopter provide Dindorf and his fellow members with “virtual shares” of the company, but Dindorf said this proposal was declined.
Meanwhile, Volocopter’s new CEO Dirk Hoke talked publicly in September 2022 about a potential IPO on the horizon.
Taking the company public “depends on the two fundamental targets,” he stated at the time, “achieving the type certificate and a successful public demonstration in Paris in 2024. Once we hit these two milestones, there will be a very reasonable time horizon toward the IPO. This will be contingent on us completing the background work … In fact, I think it was the right path for Volocopter to stay private, as we will be in a strong position once all the associated internal processes are in place.”
