Reuters reports that Ouster, a five year-old, San Francisco-based lidar startup, plans to go public via a SPAC (special purpose acquisition company), at a market capitalization of nearly $2 billion. Kudos to Paul Lienert at Reuters, who also broke a recent story on Apple’s car efforts and is having quite a week.
According to Reuters, Ouster is the fifth lidar company this year to “agree” to go public via a SPAC, after Velodyne, Luminar, Innoviz, and Aeva. That’s kind of amazing, especially given that the primary customer of these companies will presumably be self-driving car manufacturers, almost none of whom have even launched a product yet — much less built profitable businesses.
I confess to not fully understanding the advantages of SPACs. I assume they bypass a lot of the paperwork and headaches associated with traditional IPOs. But I also imagine that in theory they should come with quite high capital costs. The number of SPACs available to take a startup public is much smaller than the number of institutional investors who would buy shares in a traditional IPO.
However, the outsized valuations of Luminar and Ouster, in particular, show that companies can achieve really high valuations via SPACs. According to the CEO of Colonnade Acquisition Corp., which will acquire Ouster and take it public, “It’s not a business plan — they’re selling real products to real customers right now.”
That’s kind of a surprising quote for a $2 billion valuation.
In any, congratulations to Ouster!