SPAC-mania is coming for self-driving startups in 2021, a top VC predicts


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Special-purpose acquisition companies (SPACs) exploded in 2020, allowing more than a dozen young companies working on electric vehicles or related technologies to take advantage of investors’ interest in the likes of Tesla and Nio. Venture capitalist Reilly Brennan believes that trend will spread to the autonomous-vehicle industry this year.

“Having a lot of conversations with the SPAC sponsors and knowing where their interest is going, I think that we will see more in the AV-related stuff,” Brennan, a general partner at Trucks, told Insider.

A SPAC raises money from investors during an IPO with the sole intention of buying another company. After it decides which firm to acquire, the two companies merge. The SPAC’s founders get stock in the new company and the merger target gets a large injection of cash.

Brennan thinks a lot of the recent interest in automotive SPACs has stemmed from a desire to find companies that can replicate what Tesla has done well. So far, that has led to SPAC deals focused on firms developing electric vehicles or charging infrastructure (Tesla owns a proprietary charging network). Though Tesla’s approach to automated-driving technology is controversial, its Autopilot driver-assistance feature has outpaced most rival systems, by some accounts.

SPACs have already shown strong interest in companies that make lidars, the laser sensors that help self-driving vehicles create a more detailed picture of their surroundings. Brennan believes startups developing automated-driving technology, particularly those focused on semi trucks, are next. The logic is simple: Since the COVID-19 pandemic began, people have been ordering more packages and taking fewer trips.

“We used to take more taxi trips than we received packages, and that’s certainly different now,” Brennan said.

Autonomous-vehicle companies focused on trucking and deliveries may have an easier path to making money than those specializing in ride-hailing. Experts say creating the technology for a self-driving semi is easier than doing the same for a  robotaxi because semis tend to drive along fixed routes on the highway, which limits the degree to which they have to deal with some of the trickier elements of city driving, like navigating intersections and predicting how pedestrians will move. In recent years, autonomous-truck startups like TuSimple and Gatik have raised hundreds of millions of dollars while some of the autonomous-vehicle industry’s biggest names, like Waymo and Aurora Innovation, have ramped up their efforts in commercial vehicles.

When Brennan spoke to Insider in February, he said TuSimple seemed like a top candidate for a SPAC merger this year. On February 25, The Wall Street Journal reported that the company plans to go public through a traditional IPO in the coming months.

TuSimple declined to comment on Brennan’s prediction or the Journal’s report.

SEE ALSO: 16 leaders taking newly formed auto giant Stellantis into battle against Tesla in the coming era of EVs

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