Aurora SPACs

How Aurora created the next-generation self-driving truck in 12 weeks flat  | Aurora

Last week, TechCrunch reported that Aurora intends to become a publicly-traded company, via a merger with a special purpose acquisition company (SPAC), specifically Reinvent Technology Partners Y. To my mind, the most interesting parts of this announcement related to the massive amounts of capital that AV companies need and are frequently able to raise.

Aurora’s valuation will be $13 billion, despite an absence of revenue. After closing the SPAC, Aurora will have about $2.5 billion of cash on-hand.

To figure out how far that $2.5 billion will take them, we can do some back of the envelope math. According to TechCrunch, Aurora has about 1,600 employees. Since Aurora remains in the research and development stage, most of those employees are probably engineers, and many of them are probably well-compensated machine learning and robotics engineers.

For a run-of-the-mill web software company, I might assume a “fully loaded” cost of $150,000 to $200,000 per engineer, per year (including salary, benefits, taxes, and implicit equipment, such as rent). Aurora has a bunch of equipment costs, like buying trucks and sensors and data storage, so let’s bump that fully loaded cost to $225,000 per engineer, per year.

1,600 engineers times $225,000 per engineer equals $360 million in costs per year. That’s surely not exactly correct, but it gives a sense of the order of magnitude.

That suggests that Aurora’s $2.5 billion of post-SPAC cash will last around 7 years, although probably Aurora has significant expansion plans that will both increase its expenses and also generate revenue within that timeframe.

Also notable is Aurora’s current cash situation. The $2.5 billion in post-SPAC cash includes, according to TechCrunch, approximately $1 billion dollars from the Reinvent SPAC itself, plus another $1 billion in private investment in public entity (PIPE) financing attached to the SPAC merger. That suggests Aurora’s current cash pile is about $500 million dollars, which is approximately one year of burn.

This is a company that probably needs to raise funds soon, one way or another. Looks like they’ve found a very lucrative way to do that.

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