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Former Lordstown Motors CEO Resolves SEC Dispute Over Misleading Shareholders

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Steve Burns, the ousted founder, chairman and CEO of bankrupt EV startup Lordstown Motors, has settled with the U.S. Securities and Exchange Commission over misleading investors about demand for the company’s flagship all-electric Endurance pickup truck. The SEC charged Lordstown Motors in February 2024 with misleading investors about the sales prospects of its Endurance electric pickup truck. Lordstown Motors was founded in April 2019 as an offshoot of Burns’ other company, Workhorse Group. During and after the merger, Lordstown received $780 million from investors, according to the SEC. Lordstown Motors attracted the attention and investment of GM and even acquired the 6.2 million-square-foot assembly plant in Lordstown, Ohio from the automaker.

“Reddit’s Initial Public Offering Takes Off as Share Prices Skyrocket 60% in Mere Moments”

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Reddit sold $203 million worth of contracts to AI companies for access to its data earlier this year. In the wake of a compression in tech valuations since the implosion of the 2021-era asset bubble, few tech companies have tested public markets. Early trading results do not always augur a trouble-free public market life, however. Secondaries investors recently told TechCrunch that they weren’t sure that a successful Reddit IPO would be enough to bring life back into the IPO market in 2024. But with Astera Lab’s impressive performance yesterday and Reddit’s strong showing today, maybe there will be more life in the IPO market this year than many thought.

Investor Demand for Tech with an AI-Twist Drives Astera Labs’ IPO to 54% Increase

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Astera Labs started its life as a public company trading at $52.56 per share, up 46% when the bell rang. Astera Labs makes connectivity hardware for cloud computing data centers. Astera Labs’ IPO price valued it at around $5.5 billion, a figure that swells to around $8.9 billion at its current trading price. The strong performance of Astera in its first hours as a public company could also ameliorate some investor activity that is holding back, or even preventing some public offerings altogether. If VCs know that the startup could pop on the public market like Astera Labs, maybe they will think about the timeline differently.

“Inflection-Microsoft AI Saga Persists as Astera Labs Goes Public”

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Hello, and welcome back to Equity, the podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. This is our Wednesday show, focused on startup and venture capital news that matters. Today we have a grip of startup stories, and a venture capital item that isn’t as bad of news as it seems at first blush. Listen here or wherever you get your podcasts. Here’s the rundown:

The Demand for AI Investment: Astera Labs Goes Public

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Astera Labs IPO will reveal how much investors want in on AI Startups with an AI angle would do well to pay attentionWhile the technology world breathlessly awaits Reddit’s public debut, another company you might never have heard of is about to go public: Astera Labs. While Reddit’s IPO could do well from investors looking to buy a well-known social media company that has an interesting, burgeoning AI data business, Astera Labs is an AI hardware story. So, on an annual basis, this is far from the kind of profitable company IPO experts say this harsh market requires. In the third quarter of 2023, Astera Labs’ revenue began growing dramatically: from $10.7 million in Q2 2023 to $36.9 million in Q3, and $50.5 million in Q4. Putting it all together: Astera Labs has caught a wave thanks to AI data center spending.

Founders may have ceded excessive control to VCs in blocking IPOs

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Late-stage VCs may be preventing their startups from going public in 2024 Founders might have unintentionally given their VCs too much power to block an IPOWhile some investors are loudly bemoaning that the IPO window can’t stay shut forever, other VCs themselves are actually part of the problem. It’s a common term for late-stage investors agreeing to pay higher prices for their stake to boost a startup’s valuation. When late-stage startups raised at sky-high valuations in 2021 they may not have realized how much power they were giving their late-stage investors if the market cooled, which it did. “People confuse up and to the right, with a god-given right,” Hinkle said. He added that there is always a lot more friction between investors and startups about the decision to IPO than investors would like to admit.

VCs set to receive liquidity in 2024 through secondary market instead of IPOs

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The secondary market allows for that now.”Stripe’s recent secondary sale is a clear example of this. Leung said that Sapphire deployed roughly $500 million into the secondary market in 2023, and expects to deploy the same if not more into secondary stakes in 2024. But given the maturation of the secondary market, it doesn’t need to thaw before the market is really ready. The secondary market “is playing a huge role,” Leung said regarding companies waiting to go public. [LPs] are not pressuring the GPs to push out their assets, which reduces the demand for the public market.”

“2-Year Delay in Public Disclosure of COVID-19 Vaccination Records Due to Irish Government Website Glitch”

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A bug in an Irish government website that exposed COVID-19 vaccination records took two years to publicly discloseThe Irish government fixed a vulnerability two years ago in its national COVID-19 vaccination portal that exposed the vaccination records of around a million residents. But details of the vulnerability weren’t revealed until this week after attempts to coordinate public disclosure with the government agency stalled and ended. Security researcher Aaron Costello said he discovered the vulnerability in the COVID-19 vaccination portal run by the Irish Health Service Executive (HSE) in December 2021, a year after mass vaccinations against COVID-19 began in Ireland. Costello’s public disclosure marks more than two years since first reporting the vulnerability. His blog post included a multi-year timeline revealing a back and forth between various government departments that were unwilling to take claim to public disclosure.

5 Shows Potential: Reddit’s IPO Triumph Rests on AI Growth

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The long-running dearth of IPOs could be coming to a close, partly due to Reddit’s upcoming public debut. Expected to list this month, Reddit saw its valuation soar during the pandemic. If Reddit’s IPO does well, it could wiggle open the public-offering window just a little bit wider than we’ve seen in quarters and quarters. Of course, the public offering could also fizzle out like an unpopular opinion downvoted to hell on the site. But with an AI-friendly growth story to tell, Reddit may have timed its ramp towards the public markets just right.

Turo’s Success in Car Rental Industry Remains Unshaken, But Growth Hit a Roadblock in 2023

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Profitable car rental service Turo is still ready for an IPO, but its growth cratered in 2023Turo, the venture-backed, peer-to-peer car rental service reported its fourth-quarter and full-year financial performance this week in an updated IPO filing. The company has put the capital to good use, posting quick revenue growth since 2019, positive operating income since 2021 and net profit since 2022. In 2021 Turo’s growth rebounded from 2020’s pandemic-driven woes impressively, rising 213% that year to $469 million. However, triple-digit growth was short-lived at the car rental company, which saw its revenue growth slow to 59% in 2022 when it recorded $746.6 million worth of total revenue. TechCrunch calculates that its Q3 2022 to Q3 2023 growth rate was 13.6%, while its Q4 to Q4 growth over the same time frame was a slightly sharper 14.3%.