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The history of Fisker shows why investors should be concerned. The original company, Fisker Automotive, went bankrupt in 2013, and its assets were purchased by a Chinese auto-parts company that has retained some brand rights and started up Fisker Inc. while saying goodbye to the founder who gave the company its name. Fisker’s first product, an electric SUV called the Ocean, is expected to be launched in late 2022.
These are the types of investments that are more appropriate for venture capitalists, who are used to betting on companies without revenue or profits or even a product. The list of companies targeted by SPACs looking at the EV market or the sustainable-energy arena also includes companies making electric batteries, charging-station makers, and other components for EVs and AVs, such as Lidar.
Velodyne Lidar Inc., VLDR, +9.88% makes technology that is used as part of the vision system in autonomous vehicles, and is now in the middle of a post-SPAC war. David Hall, who founded the Morgan Hill, Calif.-based company, and his wife are sparring with the investors who purchased Velodyne Lidar, and took the company public via a SPAC late last year. But since then, the Halls and Velodyne’s acquirers had a falling out.
Last month, the company named a new chairman and chief marketing officer following an investigation into the conduct of David Hall and Marta Thoma Hall, who held those positions, respectively, and terminated Marta Hall’s employment.
“The investigation concluded that Mr. Hall and Ms. Hall each behaved inappropriately with regard to board and company processes, and failed to operate with respect, honesty, integrity, and candor in their dealings with company officers and directors,” Velodyne said in a statement and regulatory filing in late February.
The two remain directors of the company that ousted them, as well as majority owners, with a 58.4% ownership of common stock in Velodyne.
“To be completely clear: I chose to resign from the board because I had numerous concerns about the strategic direction and current leadership of Velodyne Lidar,” David Hall said in a statement last week. “I firmly believe that the board has fostered an anti-stockholder culture and that Velodyne Lidar’s corporate governance is broken. Perhaps most unsettling was the board’s decision to rubber-stamp an increased compensation package for Mr. [Anand] Gopalan despite the Company releasing weak Q4 2020 earnings and missing year-end forecasts.”
Gopalan is Veloydyne’s chief executive.
A few weeks ago, Hall told The Wall Street Journal that the moves were a “well-played-out plan to hijack the corporation by the SPAC guys.” The Halls were not immediately available for an interview, their spokesman said.
The Velodyne saga is one that can often happen at startup companies that are not yet ready for prime time, when entrenched founders spar with their investors. One high-profile example that did made its way into the press in recent years was when VC investors pushed for the ouster of co-founder Travis Kalanick at Uber Technologies UBER, -0.27%, long before the company went public.
So while SPACs may represent the democratization of venture-capital investing, where average retail investors have a more even playing field with Silicon Valley venture capitalists, getting in at the very early stages of young companies, it is also the democratizing the huge amounts of risk that are typically borne by professional investors. But unlike venture capitalists, who spread out their investments across a group of at least 10 various young or high-risk companies, knowing that most will fail as they hope to hit one big winner, individuals have a lot more to lose.
“The SPACs we are seeing now are focused on somewhat VC-like companies. Many of these companies don’t have revenue, they don’t have positive cash flow or earnings. It’s kind of like a VC in a liquid form, via a SPAC,” said Robert Davis, a partner and chief investment officer of Round Table Wealth Management. “Not all these SPACs are going to be great.” |
