Well-Funded Auto Startups Increase in Value by $ 75 Billion After $ 50 Million in PPP Loans
Electric vehicles and autonomous startups value a total of $ 75 billion today received some $ 50 million in paycheck protection program loans – and some plan to keep the money that was meant to keep small businesses afloat, Forbes reports.
PPP loans were meant to protect small businesses with fewer than 500 employees from financial hardship and ensure their workers get paid during the coronavirus pandemic, but funding quickly ran out and many struggling small businesses were left with nothing. got. subsidiaries of large companies, companies that could easily afford to mount it, or straight crooks got their share.
Naturally, tech startups have had their share of the PPP pie as well. Whether they all should have been hotly debated, but auto tech companies, including Nio, Nicolas, Canou, Lordstown Engines, electrified trucking start Hyliion, lidar technology company Light technologies and Lidar Velodyne were all on the list, reports Forbes. Most of them have benefited from the “next Tesla“The gold rush of investors looking to get rich on any company that can get ahead of an electric and self-sustaining future, no matter how much that company stinks of vaporware.
Hyliion, Nikola and Luminar have since paid off their loans, but other auto tech startups intend to hold onto the money. This begs the question: how much do these start-ups have who took the hype automotive-tech investment train really need help?
Startup EV Canoo took out $ 7 million in PPP loans, but it probably wasn’t the small business people had in mind when the program started. Through PitchBook data cited by Forbes, the company raised more than $ 1 billion in funding and was valued at $ 1.8 billion in a merger with Hennessy Capital Acquisition IV, which itself raised $ 600 million from investors. Canoo’s implied valuation recently exceeded $ 3 billion, but a Dec. 4 filing cited by Forbes indicates that the company has no plans to repay the loan:
“During the month of October 2020, Canoo submitted its request for forgiveness of the PPP loan. Canoo has and intends to continue to use the proceeds of the PPP loan for purposes consistent with the provisions of the PPP and believes that such use will meet the criteria established for loan cancellation.
Standalone tech company Velodyne Lidar, which raised $ 10 million in PPP cash, is a similar story. According to Forbes, Velodyne Lidar has raised hundreds of millions of dollars in venture capital, raised around $ 400 million after its merger with Graf Industrial, and has since seen its stock valuation double to $ 3.5 billion. The 59 million shares of its founder David S. Hall alone are worth over $ 1 billion. Yet according to a September 30 financial disclosure cited by Forbes, the company has not yet returned its PPP funds and has not responded when Forbes contacted them about this.
The same goes with the start of the electric bus and the recipient of a $ 10 million PPP loan Proterra, which Forbes described as “one of the best-funded Silicon Valley electric vehicle startups of all time.” Through PitchBook data cited by Forbes, he raised more than $ 750 million from investors alone. A spokesperson said Forbes that the $ 10 million loan “has supported our ability to maintain a full workforce as we weathered the uncertainty caused by the COVID-19 pandemic,” but would not comment further on the matter.
Two of the most prominent electric truck startups, Lordstown Motors and Nikola, were both on Forbes’ list of well-funded auto tech startups that have secured PPP loans. Lordstown Motors took out $ 1 million in PPP loans and, although it raised $ 675 million in August in a merger with DiamondPeak Holdings, Forbes reports that he recently told shareholders that he intends to conserve his PPP cash.
Start Nikola clawed back $ 4.1 million in PPP loans when things improved for the company and its founder Trevor Milton was still in charge, per Forbes. Nikola, however, repaid his PPP loans at the end of April, when he learned that he was going public, according to a Securities and Exchange Commission file.
Meanwhile, startup EV Nio’s PPP loan looks a bit more like the AutoNation mega-chain of dealerships in that it is a large company that would not qualify for small business loans as a whole. but it was a business that could be broken into smaller pieces that. It is the American subsidiary of Nio that requested $ 5.4 million in PPP loans.
Maybe this saved Nio from desperate situation, however, as it entered 2020 after exhausting more than $ 6 billion in investments and a stock price that had fallen 80% since its first day of trading. The company even warned its investors that it may not be able to continue as a business any longer.
Nio said in his April 10 PPP loan application that he used the PPP money to save 204 jobs, and the series of bailouts he carried out have paid off massively, Forbes reports. The company raised more than $ 1 billion from manufacturing and investment partnerships in China during the months of April and May. Its stock price has gone from a low of $ 3 to $ 46 per share with a market cap of over $ 60 billion.
That being said, Nio is The publicly traded auto company of billionaire EV William Li. As Forbes note, Li is often referred to as “Elon Musk of China”. Your local pub owner he isn’t, that is, unless your watering hole is someone’s labor of love worth $ 7 billion mostly coming from of the stock value of their electric vehicle business. Nio also intends to conserve PPP cash, as a company spokesperson said. Forbes that he intends to use the funds for “payroll, rental expenses, and utility bills in the United States.”
That being said, the more stable startups rated here actually have a better chance of meeting the stringent Paycheck Protection Program forgiveness requirements than, say, your neighborhood bar, because the New York Times reports in its explicator the reasons why some of the beneficiaries of planned PPP loans withdrew from the program. Companies must keep the same number of employees at the same salary as before the pandemic. This is much easier to do when investors are pumping millions of dollars into your startup than when you are relying on clients who are less willing to spend the extra money or do certain activities as the pandemic rages on.
Good luck getting all the PPP loan funds from all the auto tech startups that come in vaporware form before the loan terms are in place, however.
Correction: This story has been updated to note that Nikola repaid his $ 4.1 million PPP loan earlier this spring.
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