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Growth is not enough

By Natasha Mascarenhas

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

We were a smaller team this week, with Natasha and Alex together with Grace and Chris to sort through a week that brought together both this quarter’s earnings cycle, and the Q3 IPO rush. So, it was just a little busy!

Before we get to topics, however, a note that we are having a lot of fun recording these live on Twitter Spaces. We’ve found a hacky way to capture local audio and also share the chats live. So, hit us up on Twitter so you can hang out with us. It’s fun – and we may even bring you up on stage to play guest host.

Ok, now, to the Great List of Subjects:

Equity drops every Monday at 7:00 a.m. PDT, Wednesday, and Friday morning at 7:00 a.m. PDT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Lordstown Motors reverses claims about ‘binding orders’ for electric pickup truck

By Kirsten Korosec

Lordstown Motors does not have binding orders from customers for its electric Endurance pickup truck — a reversal from claims made earlier this week by company executives in an effort to restore confidence in the troubled company, according to a regulatory filing released Thursday.

Lordstown Motors interim CEO Angela Strand and President Rich Schmidt made a series of statements Tuesday at an Automotive Press Association event that drove up shares in the company, including that it has enough “binding orders” from customers to fund limited production of its electric pickup truck through May 2022. Those comments came just a day after an executive shakeup that included the resignation of the company’s CEO and CFO.

It appears those “binding orders” were more like agreements to maybe lease or buy, according to a document Lordstown filed with the U.S. Securities and Exchange Commission. The filing has caused shares of Lordstown to fall more than 4%.

The document reads:

To clarify recent remarks by company executives at the Automotive Press Association online media event on June 15, although these vehicle purchase agreements provide us with a significant indicator of demand for the Endurance, these agreements do not represent binding purchase orders or other firm purchase commitments. As previously disclosed in our Form 10-K/A for the year ended December 31, 2020, filed with the Securities and Exchange Commission on June 8, 2021, to date, we have engaged in limited marketing activities and we have no binding purchase orders or commitments from customers.

Lordstown notes in the SEC filing that an important aspect of its sales and marketing strategy involves pursuing relationships with specialty upfitting and fleet management companies. For instance, in March 2021. Lordstown announced an agreement with ARI, a fleet management affiliate of Holman Enterprises. Under the agreement, ARI “would use reasonable efforts to facilitate orders from its leasing clients for the Endurance over a three-year time period on the terms set forth in the agreement.”

Lordstown has also entered into vehicle purchase agreements with additional specialty upfitting and fleet management companies as a component of that strategy, the company explained. This might sound like a binding order, but it’s not, as the following language in the SEC doc makes more clear.

“These vehicle purchase agreements generally include a projected buyer order schedule over the 3- to 5-year life of the agreement, and may be terminated by either party at will on 30 days’ notice,” the filing from Lordstown reads. “They do not commit the counterparties to purchase vehicles, but we believe that they provide us with a significant indicator of demand for the Endurance.”

The reversal from Lordstown is just the latest in a string of issues at the newly public company. Lordstown Motors is an offshoot of the now former CEO Steve Burns’ other company, Workhorse Group, a battery-electric transportation technology company that is also publicly traded. Workhorse holds a 10% stake in Lordstown Motors. Lordstown Motors went public after merging with special purpose acquisition company DiamondPeak Holdings Corp.

In March, Hindenburg Research, the short-seller firm whose report on Nikola Motor led to an SEC investigation and the resignation of its founder, said it had taken a short position on Lordstown Motors, causing shares to plummet 21%. Hindenburg said at the time that its short position was based on a company that has “no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities.”

Hindenburg disputes that the company has booked 100,000 pre-orders for its electric pickup truck, a stat shared by Lordstown Motors in January. The short seller says that “extensive research reveals that the company’s orders appear largely fictitious and used as a prop to raise capital and confer legitimacy.” The firm goes further and alleges that Lordstown founder and CEO Steve Burns paid consultants for every truck pre-order as early as 2016 while he was leading Workhorse.

Two months later, Lordstown reported in its first-quarter earnings that production volumes of the Endurance would likely be half — from around 2,200 vehicles to just 1,000 — due to a lack of funding. The statements made by Lordstown execs Tuesday appeared to be an attempt, which backfired, to assuage investors.

Lordstown Motors execs cite binding orders to restore confidence a day after CEO, CFO resignations

By Rebecca Bellan

Lordstown Motors has enough “binding orders” from customers to fund limited production of its electric pickup truck through May 2022, executives at the company said Tuesday, just a day after an executive shakeup that included the resignation of the company’s CEO and CFO.

Reaching that goal will come at a cost. The company is putting all of its resources toward the Endurance pickup truck, which means other projects, including an electric recreational van, have been put on hold, according to comments made by Lordstown interim CEO Angela Strand and President Rich Schmidt during an automotive press event.

“We’re just focused currently on the Endurance truck,” Schmidt said at the event, according to a report by CNBC. “That’s our next goal for the next three months, to make sure we hit our production targets and stay within our budgets and drive forward to getting the vehicles ready for the market.”

What was meant to be the “first mass produced all-electric RV” should have been revealed this month, but with its money woes, Lordstown has pushed back the reveal and removed mention of the van from its amended annual filing — a change first noted earlier this month by the WSJ.

Investors responded to the company’s “we have enough capital” and “binding order” comments and put less weight on the “we’re punting on the electric van” part. Shares of Lordstown Motors were up 11.34% on the news to close at $10.31.

Lordstown’s Q1 report filed with the SEC last week showed a startling lack of capital that would have gotten in the way of manufacturing and delivering the EV pickup. In the filing, the company warned investors that it had “substantial doubt regarding [its] ability to continue” in the next year. The automaker has faced scrutiny in the past after investment research firm Hindenburg Research said the company had misled consumers and investors about Endurance’s preorders.

But Tuesday is a “new day” for the automaker-gone-SPAC, says Strand. Schmidt revealed the company has enough orders for limited production of the Endurance for 2021 and 2022, calling those orders “firm” and “binding.” The work truck will start at $55,000, he said. To compare, the Ford F-150 Lightning electric pickup truck, another truck aimed at commercial customers, will start below $40,000.

Schmidt said the company has $400 million in the bank, but would need more to increase its ability to build more than 20,000 vehicles per year. Lordstown is actively seeking additional capital from GM, which owns a small stake in the startup, and other early investors. In a statement to Reuters, GM said, “we are comfortable with our current relationship with LMC but we are willing to listen to proposals that make sense for both parties.”

The SPAC trash ticker is counting down

By Natasha Mascarenhas

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week had the whole crew aboard to record: Grace and Chris making us sound good, Danny to provide levity, Natasha to actually recall facts and Alex to divert us from staying on topic. It’s teamwork, people — and our transitions are proof of it.

And it’s good that we had everyone around the virtual table, as there was quite a lot to get through:

  • The team felt all kinds of ways about the Amazon-MGM deal. Some of us are more positive than the rest, but what gists out from the transaction is that for Amazon, the purchase price is modest and the company is famously playing a supposedly long-game. Let’s see how James Bond fits into it. Alex receives four points for not bringing up F1 thanks to the Bond-Aston Martin connection.
  • Turning to the SPAC game, we chatted through the recent Lordstown Motors earnings results, and what we can parse from them regarding blank-check companies, promises and reality.
  • After launching last June with just $2 million, Collab Capital has closed its debut fund at its target goal: $50 million. The Black-led firm invests exclusively in Black-led startups, and got checks from Apple, PayPal, and Mailchimp to name a few. We talk about this feat, and note a few other Black-led venture capital firms making waves in the industry lately.
  • We Resolved our transition puns and eventually spoke about the Affirm spin-out, which raised $60 million in a funding round for BNPL for businesses. There’s bigger questions there around the accessibility and point of BNPL, and if its really re-inventing the wheel or just repackaging it with simpler UX.
  • Next up, we got into a can of worms about the future of meetings thanks to Rewatch, which raised a $20 million Series A this week led by Andreessen Horowitz. The startup helps other startups create internal, private Youtubes to archive their meetings and any video-based comms. We could only spend a second on this, so if you want our longer thoughts in the form of text, check out our 3 views on the topic on Extra Crunch! (Discount Code: Equity)
  • From there we had Interactio and Fireflies.ai, two more startups that are tackling the complexities of meetings in the COVID-19 era, and whatever comes next. Both recently raised new funding, and Alex brought up Kudo to add one more upstart to the mix.
  • Noom, a weight loss platform, bulked up with $540 million in funding after nearly doubling its revenue from 2019 to 2020. The pandemic has made many people gain weight, but we chew into why Noom’s moment might be right now after a decade in the works.

Thanks for hanging out this week, Equity is back on Tuesday with our usual weekly kickoff, thanks to the American holiday on Monday. Chat then, unless you want to follow us on Twitter and get a first-look at all of Chris’ meme work. 

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday morning at 7:00 a.m. PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

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