Serve Robotics, the curbside robot delivery company backed by Uber and Nvidia, publicly debuted on the New York Stock Exchange on Thursday, making it the latest startup to opt to go public through a reverse merger as an alternative route to the capital necessary to finance growth.
The company, which turned of Uber’s acquisition of Postmates in 2021, hits the Nasdaq under the symbol “SERV” with gross proceeds of approximately $40 million, “before deducting subscription discounts and offering expenses,” according to regulatory filings , at a share price of $4.
Serve completed its reverse merger with blank check company Patricia Acquisition Corp in August 2023 and at the same time raised $30 million in a round led by existing investors Uber, Nvidia and Wavemaker Partners, raising the amount total raised at that time to 56 million dollars. . While Serve’s debut on the public markets comes from a reverse merger and not a SPAC, the two alternative paths to the IPO are not very different. Both give startups a faster route to public markets. However, using this particular financial lever has its risks, especially if the company has prior revenue or generates very little revenue. We need not look beyond 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 revenue and profits or losses.
Serve generated $207,545 in revenue last year, up from $107,819 in 2022, per regulatory filings. That’s 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 by going public. Those funds will go toward financing R&D for future generations of robots, manufacturing activities, geographic expansion, and general working capital and corporate purposes.
The startup also has big revenue ambitions. Serve said it aims to generate between $60 million and $80 million in annual revenue, with contribution margins of more than 50% and positive cash flow by the end of 2025. The company highlighted 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 expanding the 100 robots deployed today in Los Angeles to up to 2,000 robots in several US cities by the end of next year through a contract with Uber Eats. Serve has also hired Magna International as a manufacturing partner. Serve currently 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.
It serves 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 be in the advertising business,” Kashani said, tired but excited, in a phone interview minutes before the doorbell rang. It is normal for companies to barely sleep before making their public debut due to the need to finalize all the finances and pure adrenaline. “But it’s great because this can help offset delivery costs, so everyone wins.”
Kashani said Serve has had a lot of advertising interest in its cute little sidewalk robots. Annually, advertising revenue can generate between 25% and 50% of Serve’s total revenue, she said.
That is one of the value propositions that Serve has presented to investors. Serve also says it can take advantage of rapid progress in artificial intelligence and robotics to help reduce dependence on cars, because who needs something as small as a burrito delivered in a sedan anyway?
“The advantage 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 they are inherently safer… for pedestrians, cyclists and everyone else, and I think that’s true.” recognizes definitely when we talk to cities. So there is a lot of regulatory push, but there is also the fact that there is a labor shortage. You can see that companies in the delivery sector are not necessarily profitable yet and they are looking for ways to. incorporate some combination of automation into their fleets. That’s why we see a lot of interest in the solution we offer.”
Serve robots operate at Autonomy level 4which means they can operate autonomously within certain limits and conditions. However, Serve still relies on remote human operators to oversee operations in certain scenarios, such as at intersections or if something unexpected happens.
The company’s offering is expected to close around April 22. Serve’s gross proceeds from the offering could reach about $46 million, according to Kashani, if Aegis Capital Corp., the deal’s underwriter, accepts the company’s 45-day purchase option. up to 150,000 additional common shares, or about 15% of the number of shares sold, to cover any overallotment.
Following the closing of the merger, Uber had a 16.6% stake and Nvidia a 14.3% stake in Serve, according to regulatory filings. A filing from April shows the stake will change to 11.5% and 10.1% respectively once the offering closes, but a Serve spokesperson cautioned that those percentages may change given the stock’s opening price of $4. .
Sarfraz Maredia, Uber’s vice president of delivery and head of the Americas region, has joined Serve’s board of directors.
Serve Robotics began life as Postmates X, the robotics division of on-demand delivery company Postmates. Autonomous sidewalk robots began making deliveries to Postmates customers in several Los Angeles neighborhoods in 2018. They began commercial service in 2020.
Uber acquired postmates at the end of 2020 for $2.65 billion. Three months later, Postmates emerged as an independent company called Serve Robotics. The new name was taken from the autonomous curbside delivery robot developed and piloted by Postmates.