Fisker Inc. and Karma Automotive, two electric vehicle startups with a long common history, each announced this week that they have raised millions of dollars. Fisker took $ 50 million in fresh capital from “king of hedge funds” Louis Bacon and Karma Automotive raised $ 100 million from undisclosed external investors.
The money comes at a time when there seems to be renewed interest in funding money-hungry electric vehicle startups, largely due to soaring Tesla share prices and the early success of the recent IPO of the hydrogen trucking company Nikola.
In fact, Fisker Inc. plans to follow in Nikola’s footsteps and become a publicly traded company via a reverse merger, said someone familiar with the deal. The edge. The startup is in talks with Apollo Global Management to merge with the publicly traded “blank check” company of the private equity firm, known as Spartan Energy Acquisition Corp.Spartan was created in 2018 as a means for Apollo to make an investment in the energy industry, and has only until August 14 to acquire a business or else it will be dissolved, investors and shareholders recovering their money. (Spartan officials are trying to extend this date to February 2021, according to a recent file.) News of the talks between Fisker Inc. and Apollo Global Management was first reported by Reuters.
“Special Acquisition Companies” like Spartan have become increasingly popular in the past year, especially after a number of prestigious companies have had problems while going the traditional route to going public . After Uber and Lyft were released last year, each’s share price immediately fell, and the shares of the two companies are still trading below the original price. WeWork, meanwhile, totally imploded after careful consideration of the series of so-called “roadshow” meetings that banks organized with investors before going public. By merging with Spartan, Fisker Inc. could get around some of these problems and gain faster access to public markets to raise some of the huge amount of money needed to make a car.
Meanwhile, he has $ 50 million in new money from Louis Bacon’s investment company, Moore Strategic Ventures, LLC. This is more than triple the amount that Fisker Inc. had previously raised with the venture capital arm of the construction company Caterpillar and the family behind the oil drilling company Schlumberger.
Fisker Inc. just unveiled its electric vehicle, the Ocean, in January at the Consumer Electronics Show 2020. The SUV is expected to travel approximately 300 miles on a full charge. But it won’t be a performance beast like a Tesla. Instead, the founder of Fisker Inc., Henrik Fisker, said that the ocean will be entirely focused on environmental sustainability.
Henrik Fisker launched Fisker Inc. a few years ago, and originally planned to build a luxury electric car before setting this plan aside for the ocean. The company is separate from Fisker Automotive, which he founded in 2007, and became known for the Fisker Karma hybrid sports car. Problems with the battery system and a fight with the Department of Energy over a loan ultimately condemned Fisker Automotive, which went bankrupt in 2013.
Many of Fisker Automotive’s assets were acquired through the bankruptcy process by a Chinese company called Wanxiang, which relaunched the Karma project (without the participation of Henrik Fisker) under a new brand: Karma Automotive. This startup has, over the past few years, sold a Karma-based hybrid sports car known as the Revero. Karma Automotive shared its ambitions to build all-electric vehicles as well as sell the underlying technology, but has experienced significant difficulties in the past year, laying off hundreds of employees.
Now, however, the company says it has raised $ 100 million and is looking to raise an additional $ 300 million. Karma Automotive did not disclose who the new investors are, but Bloomberg reports that Wanxiang is seeking to sell equity interests to US-based private equity firms. This would help reduce Chinese participation to less than 50% in order to make the sale to government fleets more politically acceptable.
While the enthusiasm around Tesla and Nikola may have helped lose money for Fisker Inc. and Karma Automotive, many other EV startups in the U.S. are still struggling. Chinese start-up EV Byton, which has a North American headquarters in Silicon Valley, recently announced that it was suspending all global operations for six months due to money problems. Los Angeles-based Faraday Future is still in limbo, although its founder has just closed his personal bankruptcy file, and the startup says it will now be able to entertain investors who may have been finicky. Seres, born SF Motors, almost fell off the map after taking a dip in Silicon Valley a few years ago.
Some lucky ones, such as Rivian, Lucid Motors and Nio, have successfully completed large rounds of funding before the pandemic. Although in the case of Lucid Motors, the startup had to give up majority control to Saudi Arabia. And in exchange for his own type of bailout, Nio had to turn to public entities in China.