AEye to Become Publicly Traded via SPAC Merger

AEye, a startup specializing in lidar technology for both autonomous vehicles and advanced driver-assistance systems (ADAS), is set to enter the public market. This will be achieved through a merger agreement with CF Finance Acquisition Corp. III, resulting in a company valuation of $2 billion.

Following a Trend in the Lidar Industry

This move aligns with a growing trend among lidar companies opting for special purpose acquisition companies (SPACs) as an alternative to traditional initial public offerings (IPOs). Velodyne Lidar initiated this pattern last year, announcing plans to go public via a merger with Graf Industrial Corp., establishing a market value of $1.8 billion. Subsequently, companies like Luminar, Aeva, Ouster, and Innoviz have followed suit.

AEye successfully secured $225 million in private investment in public equity (PIPE) funding. This investment comes from a consortium of institutional and strategic investors, including GM Ventures, Subaru-SBI, Intel Capital, Hella Ventures, and Taiwania Capital, alongside other undisclosed participants.

Upon completion of the transaction, AEye anticipates holding approximately $455 million in cash reserves. This figure incorporates $230 million held in trust by CF Finance Acquisition Corp. III, a SPAC backed by Cantor Fitzgerald.

Understanding Lidar Technology

Lidar, or light detection and ranging radar, utilizes laser light to precisely measure distances. This data is then used to create a detailed, three-dimensional map of the vehicle’s surroundings. Many within the autonomous driving sector consider this sensor technology to be essential for safe and reliable operation.

While Velodyne previously held a dominant position in the lidar market, supplying the majority of autonomous vehicle developers, numerous startups have emerged in recent years. These companies are striving to gain market share by offering unique variations of the technology and distinct business strategies.

Adapting Business Models

Over the past three years, lidar companies have refined their business models. This shift occurred as the timeline for widespread autonomous vehicle deployment extended. Many startups began to emphasize their perception software capabilities or targeted automakers, proposing that sensors could enhance driver assistance systems and provide redundancy.

AEye’s Strategic Positioning

AEye has broadened its focus beyond solely autonomous vehicles. The company intends to utilize the capital raised through this public offering to expand its operations in key markets.

AEye believes its lidar technology, coupled with its collaborations with Tier 1 and Tier 2 suppliers such as Continental, positions it favorably for scalability and adoption by major automotive manufacturers. The company’s lidar sensors scan the environment and, aided by its perception software, identify and prioritize relevant objects.

Expanding Market Applications

While automotive applications, particularly ADAS and, eventually, autonomous vehicles, represent AEye’s primary market, the company envisions broader applications in industries like mining, trucking, traffic management, aviation, and drone technology.

“We believe lidar will eventually be integrated into any device currently equipped with a camera, provided it’s offered at an appropriate price point and with sufficient reliability,” stated CEO Blair LaCorte during an investor presentation. “Considering the anticipated widespread adoption of lidar for both consumer and industrial uses, we project a total addressable market of $42 billion by 2030.”

Financial Projections

AEye is currently in the early stages of capturing this potential market. The company projects $4 million in revenue for 2021 and anticipates a net loss (EBITDA) of $59 million.

Commercial production of AEye’s sensors is expected to commence in the fourth quarter of 2021. This is projected to drive revenue growth to $13 million in 2022. By 2024, AEye forecasts revenue of $175 million and expects to achieve positive EBITDA in the second half of the year.

Transaction Details

The newly formed entity will be known as AEye Holdings Inc. and is slated to be listed on the Nasdaq exchange. The transaction is anticipated to be finalized in the second quarter of 2021.

The existing management team, including Blair LaCorte as CEO, founder Luis Dussan as CTO, and Bob Brown as CFO, will continue in their respective roles.