Space Florida’s incredible shrinking Rivian stake – TechCrunch


It will have It was a legendary reward for all investors, not to mention public institutions. It’s about exchanging billions of dollars in new EV startups for cars you can’t drive.

Until last year, the state’s aerospace economic development agency, Space Florida, believed that it owned 3% of Rivian as a result of a large leaseback agreement made 10 years ago.Continue Rivian’s blockbuster IPO In November, the stock was worth nearly $ 3 billion, based on Rivian’s current market capitalization. That’s more than 1,000 times the return on Space Florida’s investment. The investment, which totaled nearly $ 2 million, included buying a prototype from Rivian in exchange for a company warrant and the cost of buying stock.

Instead, and through a mechanism that neither the agency nor Rivian can explain, Space Florida will hold only 60,000 shares of the company, a public record of an agency show worth less than $ 7 million.

So why did commercial space boosters first get involved with EV pickup makers? And how did that assumed ownership evaporate?

Space Florida He started working with Rivian before he was called Rivian and before he built an electric car. In 2009, RJ Scaringe founded Mainstream Motors as a spin-out from his father’s R & D company in Rockledge, Florida. His original plan was to design a super-efficient gas-powered coupe with a capacity of 60 miles per gallon and produce it in Florida by the end of 2013 using lightweight materials and modular manufacturing.

The Florida Energy and Climate Commission has promised $ 2 million in seed money, enough for Scaringe to hire a small team to design a prototype. This is separate from the Rivian deal with Space Florida.according to To Bloomberg ReportThe team then worked 24 hours a day to plan the vehicle, apart from the engine. When the plans were ready, they shipped them to a contract manufacturer in Detroit, along with a mini cooper for that power plant.

After that, Scaringe stopped what seemed to be a genius blow. In June 2010, the company’s first prototype was still a collection of Detroit custom and scavenging parts, which Scaringe sold to Space Florida for $ 500,000.

“Originally, it could bring a car manufacturing plant to Florida,” Space Florida vice president Dale Ketcham told TechCrunch in a recent interview. “But what intrigued us was the potential applications outside the planet, whether on the Moon or Mars.”

When the first prototype, nicknamed “The Blue Thing,” arrived in Florida in October 2010, Space Florida immediately leased it to Scaringe for $ 100 a year. According to Bloomberg, the car wasn’t ready to drive on public roads, much less ready to go into production. However, the company was able to use it for testing and demonstration. This includes a speed test (not completed) plan at NASA’s Shuttle Landing facility at the Kennedy Space Center. Records obtained through the requirements of the Information Disclosure Law are.. After the 10-year lease expired, Scaringe was finally able to buy back the vehicle from Space Florida for $ 100.

However, as “additional consideration,” the startup will also issue Space Florida a warrant to acquire 100 shares of common stock that can be redeemed at any time over the next 10 years for $ 1,000 per share, according to Space Florida documents.

“This is one of the little things we’ve done with other organizations in the past,” Ketcham recalls. “It gave us a small piece of pie, and it gave them some cash.” Space Florida also helped a small company with business advice.

Scaringe has renamed Mainstream Motors to Avera. In March 2011, he changed it to Rivian again and persuaded Space Florida to repeat the deal. The agency will buy three more vehicles for $ 1 million and lease them to Rivian again for $ 100 a year. This time, Rivian has issued another 200 warrants to Space Florida. It’s $ 1,843 per share. So if Space Florida wants to redeem these shares, it will cost $ 368,600.

It was a dark time for Rivian. Scaringe was scrambling for investors and even to the core employees. Rivian took until June 2014 to complete the three promised vehicles and several more months to start leasing. Shortly thereafter, with a large investment from Saudi Arabia, Skaringe moved Rivian to Michigan, bought a factory in Illinois, and put Florida in the rear-view mirror.

But he left the company a little.Space Florida has recorded a Rivian warrant agreement In that financial statement 2013. The first warrant of 100 shares said the company was “estimated to be equal to 1% ownership.” Second, in the case of 200, “equivalent to 2% ownership”. Space Florida believed that 300 shares would make up the full 3% of young startups, but its future is still uncertain.

“We have an investment fund to make that kind of investment,” Ketcham said. “Not everything is a winner. If you’re a company crater, you’re SOL like everyone else.”

But Rivian didn’t make a crater. In fact, the progress is exponential, with hundreds of millions of dollars inflows from Amazon, Ford, and Cox Automotive. Billions of dollars have flowed in from RowePrice, Amazon’s Climate Pledge Fund, Ford and more.

Rivian CEO RJ Scaringe spoke at an event at the Griffith Observatory in Los Angeles in November 2018, before announcing the company’s first two electric vehicles. Image credit: Getty / Philip Pharaohne

2018, Scaringe told TechCrunch: “We have a good relationship with Space Florida. They wanted us to be able to manufacture there, but as the company began to grow, the lack of automotive infrastructure became a problem. Given that there are quite a few warrants and those warrants have become very valuable, I think they are very pleased with the company’s progress. “

But exactly how much is it worth? Between 2013 and 2020, Space Florida recorded these 300 warrants at a cost of just under $ 1.5 million. Meanwhile, Rivian’s valuation surged from the $ 10 million trade in Space Florida in 2010, and its shares were split multiple times. (This means that even a handful of shares acquired as a private company in the early days of Rivian can reach thousands as the company grows and eventually goes public).

All the while, according to official financial statements, Space Florida assumed it still owned 3% of Rivian. Submitted by October 2020..

The warrant was finally enforced in late 2020. Latest financial statementsPublished by Space Florida in October, the agency currently holds only 60,000 Rivian shares. This is worth less than $ 7 million. This is about 1/500 of what a 3% stake represents, Less than half That would have been won if Space Florida had simply invested in Nasdaq on behalf of Rivian 10 years ago.

“Something feels a bit strange here,” said Scott Orn, COO of Kruze Consulting, an accounting firm specializing in funded early-stage companies. He states that early ownership can be diluted with the participation of larger investors or reduced by other strategies such as the company’s capital increase. “But, for example, we’re moving from 10% ownership to 1% ownership,” he says. “They cannot be completely washed away.”

Rivian did not comment on Space Florida’s warrant agreement or ownership because of shareholder confidentiality. Space Florida did not disagree with the figures in the financial statements, but declined to comment on the value of the investment “pending board review of policies on these issues.”

Ketchum predicted, “Still, it will prove to be a very good investment for the state.”

Despite a big and somewhat mysterious contradiction, Space Florida has no plans to pursue Rivian in court. “The relationship with Rivian has been and is still wonderful,” Ketcham said. “They did what they needed, and we want them to succeed above all else.”

But that’s not the only disappearance. Neither organization was able to tell TechCrunch what happened to the four original prototype Rivian cars, which had largely rewritten the history of their investment.

Space Florida’s incredible shrinking Rivian stake – TechCrunch Source link Space Florida’s incredible shrinking Rivian stake – TechCrunch

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