Deal of the week
This week I couldn’t decide, which ‘deal’ was bigger: the Microsoft-led $2 billion round into Cruise or the $2.65 billion raised by Rivian. Let’s look at both.
The $2 billion that autonomous vehicle company Cruise raised has pushed its valuation up to $30 billion. The announcement is another example of how much money will be required to commercialize a ride-hailing service that uses autonomous vehicles — at least if the aim is to do it scale. I’m interested in this deal because it included a I’ll-scratch-your-back-if-scratch mine kind of partnership with Microsoft.
Under the long-term strategic partnership, Cruise will use Azure, Microsoft’s cloud and edge computing platform, for its yet-to-be launched autonomous vehicle ride-hailing service. Vendor announcements are typically the kind of ‘meh’ news I avoid covering. But in this case, it’s notable because it hints at a new competitive frontier for the cloud-computing giants like Microsoft and AWS to battle over.
Any serious autonomous vehicle company needs a robust cloud computing platform. The massive amounts of data generated by self-driving vehicles makes cloud services one of the bigger costs for an AV company.
Cruise benefits by locking in lower prices for cloud services. Microsoft gets to test some of its bleeding-edge systems that can handle workloads needed to bring machine learning and robotics — like autonomous vehicles — to life and at scale. Expect Microsoft to try and lock in more of these deals.
On to Rivian …
As I noted above, electric automaker Rivian announced this past week that it raised $2.65 billion. A source familiar with the round told me that Rivian is now valued at $27.6 billion. That’s a stunning figure for a company that has yet to deliver product.
The round, which was led by funds and accounts advised by T. Rowe Price Associates Inc., also included Fidelity Management and Research Company, Amazon’s Climate Pledge Fund, Coatue and D1 Capital Partners as well as several other existing and new investors.
This deal comes at a critical time for Rivian. The automaker is undertaking the design, development, production and delivery of two consumer vehicles (the R1T pickup truck and the R1S SUV), building out an electric vehicle charging network and working to fulfill an order for 100,000 commercial delivery vans for Amazon. Rivian is slated to begin production and deliveries of its electric R1T pickup truck in July.
It occurred to me that Rivian is one of the few new electric vehicle companies that has not announced a merger with a special-purpose acquisition company, also known as a blank check company. Instead, Rivian is going the traditional venture route. Will Rivian take the leap to the public markets?
Other deals that caught my attention this week:
EVgo, the wholly owned subsidiary of LS Power that owns and operates public fast chargers for electric vehicles, has reached a deal to become a publicly traded company through a merger with special-purpose acquisition company Climate Change Crisis Real Impact I Acquisition Corporation. The combined company will be valued at $2.6 billion.
Speaking of SPACs, it seems at least two other transportation companies are mulling this path to becoming a publicly traded company. Reuters reported that Joby Aviation — yes the electric air taxi company that now owns Uber Elevate — is exploring a SPAC merger that would value it at $5 billion. Axios reported that Lilium, the German electric air taxi company, has held talks to go public via a SPAC called Zanite Acquisition.
And …. Kensington Capital Acquisition Corp II has filed for a $200 million IPO and intends to target business operating in the North America automotive and automotive-related sector. The “Kensington” name should sound familiar. Kensington Capital Acquisition Corp, another SPAC launched by Kensington Capital Partners, merged with QuantumScape last year.
MotoRefi, an auto refinancing startup, raised $10 million in a round led by Moderne Ventures. Liza Benson, a partner at Moderne Ventures, will join the board.
OneRail, an Orlando-based delivery platform, raised $6.7 million in a round led by Chicago Ventures and new investor Bullpen Capital. Existing investors Las Olas Venture Capital and Alpine Meridian Ventures, along with new investors Triphammer Ventures (Alumni Ventures Group), and CreativeCo Capital also participated.
Volta, the developer of a network of electric vehicle charging stations that monetize using advertising, has raised $125 million in new funding.
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