Uber, Nvidia-backed Serv Robotics raises $40 million in public markets

Serv Robotics, the Uber and Nvidia-backed sidewalk robot delivery company, debuted publicly on the New York Stock Exchange on Thursday, giving it the option of going public via a reverse merger as an alternative route to the capital needed to fund growth. Became the latest startup to choose.

The company, which spun out of Uber’s acquisition of Postmates in 2021, hits the Nasdaq under the ticker “Serve” with gross proceeds of about $40 million — before deducting underwriting discounts and offering expenses, According to regulatory filings – at a share price of $4.

Serv completed its reverse merger with blank-check company Patricia Acquisition Corp in August 2023, and also secured $30 million in a round led by existing investors Uber, Nvidia and Wavemaker Partners, bringing the total amount raised at that time. It became 56 million dollars. , While Serv’s first foray into the public markets was not a SPAC but a reverse merger, the two alternative paths to an IPO aren’t much different. They both provide startups with a faster path to the public markets. However, pulling this particular financial lever has its own risks, especially if the company is pre-earning or bringing in very little revenue. We don’t need to look further than the countless fallen autonomous vehicle and electric vehicle companies to determine that this is not a golden ticket to longevity or profitability.

Like any publicly traded company, this path requires financial disclosures that provide information about revenues and profit or loss.

Serv made revenue of $207,545 last year, up from $107,819 in 2022, according to regulatory filings. It is at a loss of $1.5 million in 2023 and $1.04 million in 2022. However, Serv Robotics said it expects huge growth from the money generated by going public. Those funds will be spent on funding R&D for future generations of robots, manufacturing activities, geographic expansion, and general working capital and corporate purposes.

The startup also has some big revenue ambitions. Serva said it aims to generate annual revenue between $60 million to $80 million by the end of 2025 with a contribution margin of more than 50% and positive cash flow. The company pointed to recent momentum, including its 25% month-over-month growth. In delivery since 2022 when the startup started delivery for Uber Eats.

Future growth will come through a contract with Uber Eats to expand from the 100 robots deployed today in Los Angeles to 2,000 robots in multiple US cities by the end of next year. Sarva has also listed Magna International as a manufacturing partner. Currently, Serve handles 300 restaurants through the Uber Eats and 7-Eleven platforms in LA, but it has its sights set on Dallas, San Diego and Vancouver, Canada, according to CEO Ali Kashani.

Kashani told TechCrunch to serve projects whose revenue will come from a large portion of ads.

“I never thought I would start a robotics company and then get into the advertising business,” an exhausted but excited Kashani said in a phone interview minutes before the bell. It’s common for companies to barely sleep before making their public debut due to the need to finalize all the financials and pure adrenaline. “But it’s great because it can help offset delivery costs, so everyone wins.”

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

This is one of the value propositions that Serv has put forward to investors. Serve also says it can take advantage of rapid advances in AI and robotics to help reduce reliance on cars, because who needs a small thing like a burrito delivered in a sedan anyway?

“The upside 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 our robots, so by nature, they’re safer… for pedestrians, for bikers, everyone else.” For everyone, and I think this is certainly recognized when we talk about cities, there is a lot of regulatory momentum, but you also have the fact that there is a labor shortage. “Companies in the delivery space are still not necessarily profitable, and they’re looking for ways to bring some mix of automation into their fleets. So we’re seeing a lot of interest in the solutions we’re providing.”

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

The company’s offering is expected to close around April 22. According to Kashani, Serv’s gross proceeds from the offering could reach approximately $46 million if the deal’s underwriter Aegis Capital Corp. takes up the company’s 45-day option to purchase up to 150,000 additional shares of common stock, or the shares sold. About 15% of the number, to cover any over-allocation.