Uber, Nvidia-backed Serve Robotics hits public markets with $40M splash

Serve Robotics, the curbside robot delivery company backed by Uber and Nvidia, made its public debut on the New York Stock Exchange on Thursday, making it the latest startup to choose to go public via a reverse merger as a route alternative to obtain the capital necessary to finance growth.

The company, formed from Uber’s acquisition of Postmates in 2021, enters Nasdaq under the symbol “SERV” with gross proceeds of approximately $40 million – “before deducting underwriting discounts and offering expenses.” , according to regulatory documents – at the share price. of $4.

Serve completed its reverse merger with blank check company Patricia Acquisition Corp in August 2023, and at the same time secured $30 million in a funding round led by existing investors Uber, Nvidia and Wavemaker Partners, bringing the total amount raised at the time at $56 million. . Although Serve’s public market debut came from a reverse merger and not a SPAC, the two alternative paths to the IPO aren’t too different. They both provide startups with faster access to public markets. However, pulling this particular financial lever comes with risks, especially if the business is pre-revenue or generating very little revenue. You only need to look at the countless failed autonomous and electric vehicle companies to determine that this is not a golden ticket to longevity or profitability.

Like any publicly traded company, this route requires financial information providing information on revenue and profit or loss.

Serve generated $207,545 in revenue last year, up from $107,819 in 2022, per regulatory filing. This represents a loss of $1.5 million in 2023 and $1.04 million in 2022. However, Serve Robotics said it expects huge growth fueled by the money generated from the introduction in stock exchange. These funds will be used to finance R&D for future generations of robots, manufacturing activities, geographic expansion, general working capital and corporate objectives.

The startup also has big revenue ambitions. Serve said it aims to generate $60 million to $80 million in annual revenue, with contribution margins above 50% and positive cash flow by the end of 2025. The company highlighted its recent momentum , including its 25% month-over-month increase. in deliveries since 2022, when the startup began delivering for Uber Eats.

Future growth will come from scaling the 100 robots deployed today in Los Angeles to 2,000 robots in multiple U.S. cities by the end of next year through a contract with Uber Eats. Serve also brought on Magna International as a manufacturing partner. Currently, Serve operates 300 restaurants through the Uber Eats platform and 7-Eleven in Los Angeles, but has its eyes on Dallas, San Diego and Vancouver, Canada, according to CEO Ali Kashani.

Serving projects where a large portion of its revenue will come from advertising, Kashani told TechCrunch.

“I never thought I would start a robotics company and then go into the advertising business,” a tired but excited Kashani said in a phone interview minutes after the bell rang. It’s normal for companies to barely sleep before making their public debut, out of the need to finalize all the financial statements and out of pure adrenaline. “But it’s great because it can help offset delivery costs, so everyone wins.”

Kashani said Serve has received a lot of interest in ads for its cute little sidewalk robots. On an annual basis, advertising revenue can generate 25% to 50% of Serve’s total revenue, he said.

This is one of the value propositions that Serve has presented to investors. Serve also claims it can harness rapid advances in AI and robotics to help reduce reliance on cars, because who needs something as small as a car anyway? burrito delivered in a sedan?

“The tailwind here is that these robots are much more scalable than many of the alternative approaches we have,” Kashani said. “If you look at a car, it has about 3,000 times more kinetic energy than one of our robots, so by nature they’re safer… for pedestrians, bikers for everyone, and I think that it’s definitely recognized when we talk to cities So there’s a lot of regulatory dynamics, but there’s also the fact that there’s a labor shortage You can see that companies in the sector. of delivery are still not necessarily profitable and they are looking for ways to introduce some automation into their fleets. So we are seeing a lot of interest in the solution that we are offering.

Serve’s robots operate with Level 4 autonomy, meaning they can operate autonomously within certain limits and conditions. However, Serve still relies on remote human operators to supervise operations in certain scenarios, such as at intersections or if something unexpected happens.

The company’s offering is expected to close around April 22. Gross proceeds from Serve’s offering could reach about $46 million, according to Kashani, if Aegis Capital Corp., the deal’s underwriter, accepts the company’s 45-day buyout option. to 150,000 additional ordinary shares, or approximately 15% of the number of shares transferred, to cover possible over-allotments.