Uber and Nvidia-backed sidewalk robot delivery company Saab Robotics went public on the New York Stock Exchange on Thursday, becoming the latest startup to choose to go public through a reverse merger as an alternative means of financing growth. .
The company, which was spun out from Uber's acquisition of Postmates in 2021, is listed on the Nasdaq under the ticker “SERV” and has gross proceeds of approximately 10,000 yen at the stock price “before underwriting discounts and offering expenses,” according to regulatory filings. The amount is 40 million dollars. of $4.
Serve completed its reverse merger with blank check company Patricia Acquisition Corp in August 2023, while simultaneously securing a $30 million round led by existing investors Uber, Nvidia, and Wavemaker Partners, bringing the total raised at the time to $5,600. It amounted to 1 million dollars. . While Serve's public market debut is through a reverse merger rather than his SPAC, his two alternative paths to an IPO aren't all that similar. Both offer startups a faster route to the public market. However, pulling this particular financial lever comes with risks, especially if the company is not profitable or has very little revenue. You don't need to look at the countless self-driving and electric vehicle companies that have fallen to see that this is not a golden ticket to longevity or profitability.
Similar to other publicly traded companies, this method requires financial disclosures that provide information about revenue and profit and loss.
Serve had revenue of $207,545 last year, up from $107,819 in 2022, according to regulatory filings. This translates into a loss of $1.5 million in 2023 and $1.04 million in 2022. However, Saab Robotics said it expects significant growth from the funds generated by the initial public offering. These funds will fund research and development of future generations of robots, manufacturing activities, geographic expansion, general working capital and corporate purposes.
The startup also has some big revenue goals. Serve said he aims to generate $80 million from annual sales of $60 million, with a contribution margin of more than 50% and positive cash flow by the end of 2025. The company pointed to recent momentum, including a 25% month-on-month increase. The number of deliveries has increased since his 2022, when the startup started delivering with Uber Eats.
Future growth will come from expanding from 100 robots currently deployed in Los Angeles to up to 2,000 robots in multiple U.S. cities by the end of next year through an agreement with Uber Eats. Serve has also hired Magna International as a manufacturing partner. CEO Ali Kashani said Saab currently has 300 restaurants in Los Angeles through its Uber Eats and 7-Eleven platforms, but is also eyeing Dallas, San Diego and Vancouver in Canada.
The majority of the company's revenue will come from advertising, Kashani told TechCrunch.
“I never thought I'd start a robot company and then go into the advertising business,” a tired but excited Kashani said in a phone interview minutes before the bell rang. It's normal for companies to get little sleep before going public due to the need to finalize all financial information and the need for pure adrenaline. “But it’s great because it offsets shipping costs, so everyone wins.”
Kashani said Saab's ad for its cute little sidewalk robot has generated a lot of inbound interest. On an annual basis, advertising revenue could generate 25% to 50% of Serve's total revenue, he said.
This is one of the value propositions that Serve offers to investors. Serve also says rapid advances in AI and robotics can be used to reduce dependence on cars. Who needs something as small as a burrito delivered in a sedan?
“The tailwind here is that these robots are much more scalable than many of the alternative approaches we have,” Kashani says. “When you look at cars, cars have about 3,000 times more kinetic energy than our robots, so cars are inherently safer for pedestrians, for cyclists, for everyone else. I think that's definitely recognized when we talk about “to cities.” There is a lot of regulatory momentum, but there is also a labor shortage. We see that companies in the delivery industry are still not necessarily profitable and are looking for ways to incorporate some automation into their fleets. Therefore, there is a lot of interest in the solutions we offer. ”
Serve's robots operate at Level 4 autonomy. This means that it can operate autonomously within certain boundaries and conditions. However, Serve still relies on remote human operators to monitor operations in certain scenarios, such as at intersections or when unexpected events occur.
The company's offering is scheduled to close on or about April 22nd. Kashani said Saab's total proceeds from the offering could reach about $46 million if the transaction's underwriter, Aegis Capital, accepts the company's 45-day buyout option. An additional 150,000 shares of common stock, or approximately 15% of the number of shares sold, will be allocated to cover the over-allotment.
At the time of the merger, Uber owned 16.6% of Saab and Nvidia owned 14.3%, according to regulatory filings. According to the April filing, the stakes will change to 11.5% and 10.1%, respectively, after the offering closes, but a Saab spokesperson said that given the initial price of $4, these ratios will not change. warned that there was a possibility of
Sarfraz Maredia, Uber's vice president of delivery and head of the Americas, has joined Serve's board of directors.
Serve Robotics was born as Postmates X, the robotics division of on-demand delivery company Postmates. The autonomous sidewalk robot began delivering to his Postmates customers in multiple Los Angeles neighborhoods in 2018 and began commercial service in 2020.
Uber acquired Postmates in late 2020 for $2.65 billion. Three months later, Postmates X spun out as an independent company called Serve Robotics. The new name was taken from the autonomous sidewalk delivery bot that was developed and operated by Postmates.