Serve Robotics is making headlines as it debuts on the New York Stock Exchange, supported by big names like Uber and Nvidia. But what sets this sidewalk robot delivery company apart from the rest is its unique path to going public.
Unlike traditional IPOs, Serve opted for a reverse merger, joining forces with Patricia Acquisition Corp in August 2023. This strategic move not only gave the company quick access to the public market, but also secured a $30 million investment from existing backers, bringing the total raised to $56 million.
This approach may seem similar to the popular SPAC route, but it does come with its own set of risks. Without a solid revenue stream, these companies are often met with financial skepticism and can struggle to maintain longevity and profitability. We’ve seen this with numerous autonomous and electric vehicle companies.
But as a publicly traded company, Serve is held to the same financial disclosure standards as any other business. In 2023, the company brought in $207,545 in revenue, up from $107,819 the previous year. However, with a net loss of $1.5 million and $1.04 million in 2023 and 2022 respectively, the pressure is on to generate significant earnings.
Serve has ambitious goals for revenue, aiming for $60 to $80 million annually with a contribution margin of 50%. And the company is confident these numbers are achievable with the financial support from going public. The funds will primarily be used for R&D, expanding into new areas, and general operations.
But perhaps the most intriguing aspect of Serve’s business plan is its potential for ad revenue. CEO Ali Kashani explains that the company has received significant interest from advertisers looking to capitalize on the “cute little sidewalk robots.” On average, Serve expects ad revenue to make up 25-50% of its total earnings.
“I never thought that I would start a robotics company and then be in the ads business,” shares Kashani in an interview. “But it’s great because this can help offset the delivery costs, so everybody wins.”
In addition to generating income, Serve’s robots also have the potential to impact urban transportation. By utilizing AI and robotics, the company aims to reduce reliance on cars and promote safer, more efficient delivery methods.
“The tailwind here is that these robots are a lot more scalable than a lot of the alternative approaches we have,” says Kashani. “If you look at a car, it has about 3,000 times more kinetic energy than one of our robots, so just by nature, these are safer… for pedestrians, bikers for everybody else, and I think that’s definitely recognized when we talk to cities.”
The company currently operates 100 robots in Los Angeles and plans to expand to 2,000 in multiple U.S. cities by the end of 2022. Magna International is on board as a manufacturing partner, and Serve already works with 300 restaurants through a contract with Uber Eats and 7-Eleven. The company also has its sights set on Dallas, San Diego, and Vancouver, Canada.
As with any delivery service, speed and efficiency are key to success, which is why Serve has attracted big-name investors like Uber and Nvidia. And with the recent increase in deliveries by 25% month-over-month since 2022, it’s clear that Serve is on the right track.
- Serve’s gross proceeds from the offering could reach approximately $46 million, depending on if Aegis Capital Corp exercises their option to purchase an additional 150,000 shares of common stock.
Investor update: Upon the closing of the merger, Uber’s stake in Serve will drop from 16.6% to 11.5%, and Nvidia’s from 14.3% to 10.1%. Sarfraz Maredia, Uber’s vice president of delivery and head of its Americas region, has also joined Serve’s board.
Now with its debut on the public market, Serve is ready to make headlines and revolutionize the future of delivery. And with the support of industry giants, it’s clear that this sidewalk robot company has a bright future ahead.
