Though the frothy excitement of special purpose acquisition companies (SPACs) is going flat in the face of federal scrutiny, autonomous-vehicle software maker Aurora Innovation is reportedly close to a merger with a blank-check company started by one of its investors.

Aurora, led by autonomous driving pioneer Chris Urmson, could agree to a business combination with Reinvent Technology Partners Y (NASDAQ: RTPYU), the third SPAC launched by LinkedIn co-founder and Aurora investor Reid Hoiffman, social game developer Zynga Inc. (NASDAQ: ZNGA) founder Mark Pincus and managing partner Michael Thompson, the website TechCrunch reported Friday.

FreightWaves could not independently confirm the report, which cited unidentified sources saying the definitive merger could be announced as soon as this week. Aurora did not immediately respond to a request for comment. Aurora also declined a comment to TechCrunch.

An Aurora SPAC would follow the recent reverse merger announced by autonomous-trucking software maker Plus, backed by Hennessy Capital in its fifth SPAC. Rival TuSimple was the first to reach public markets in a traditional initial public offering (IPO) in April.

SPAC scrutiny

According to TechCrunch, the valuation of Aurora — which counts PACCAR Inc. (NASDAQ: PCAR) and Volvo Group (OTC: VLVLY) as partners in its relatively recent expansion into commercial vehicle autonomy — could be valued at $12 billion to $20 billion.

According to regulatory filings, Reinvent Technology Partners Y priced its IPO of 85 million units at $10 per share to raise $850 million. The SPAC issued an additional 12.7 million shares with total gross proceeds of $977 million. 

Aurora told the Securities and Exchange Commission (SEC) in March that it had raised $54.9 million in an equity offering that began in March.

The SEC has become increasingly cautious about SPACs, of which 330 with a total value of nearly $105 billion have launched this year, according to SPACInsider.

The SEC has warned about the valuation of stock warrants, often awarded at a set price to early SPAC share purchasers. Many de-SPACed companies where business combinations have been completed, have recharacterized warrants as liabilities instead of equity based on SEC guidance. The non-cash adjustments typically have no bearing on its operations.

Other SPACs

Hoffman, Pincus and Thompson have formed three SPACs, or so-called blank-check companies that pool investor funds in a shell company that conduct an IPO with the sole purpose of merging with an existing business. Two of those settled on private company mergers. 

In February, Reinvent Technology Partners said it would merge with 12-year-old electric vehicle takeoff and landing (eVTOL) company Joby Aviation based in Santa Cruz, California. 

Home insurance startup Hippo agreed to merge with Reinvent Technology Partners Z. (NYSE:RTPZ) in March.

Joby has raised more money than its rivals, including $400 million from Toyota Motor Corp., (NYSE: TM), which will help it with manufacturing, according to Bloomberg. Joby recently took over Uber Technologies Inc.’s flying-car division. Uber (NYSE: UBER) invested $75 million in Joby and committed to adding Joby’s air taxis to its app.

Hoffman’s investment in Aurora

Uber also invested in Aurora, to whom it sold its Autonomous Technology Group (ATG) in December. Uber paid Aurora $400 million for a 26% stake in the combined company valued at $10 billion. ATG was valued at $7.25 billion based on a $1 billion investment in 2019 from Toyota, automotive components manufacturer DENSO and SoftBank’s Vision Fund. 

Aurora is developing autonomous software for Toyota passenger vehicles.

Aurora raised $90 million in February 2018 from Greylock Partners, where Hoffman is a partner. He and Mike Volpi from Index Ventures, which also participated in the capital raise, became Aurora board members.

In 2019, Aurora raised $530 in a Series B round led by Sequoia Capital. Sequoia partner Carl Eschenbach serves on Aurora’s board. Reinvent Capital was a participant in the round. Greylock and Index Ventures re-upped as well.

Aurora’s trucking ambitions

In a recent blog post, Aurora said it is in the process of mapping highways throughout Texas to expand revenue-generating autonomous runs supervised by a human safety driver.

“Our first commercial pilots will move goods for shippers and carriers on several key ‘middle-mile’ routes in Texas, which moves more freight by trucks than any other state,” Aurora said. “For shippers and carriers with existing hubs and large volumes of freight, we expect to ultimately drive the complete route with no need for an intermediate consolidation point.”

The combination of Aurora with Uber ATG increased the workforce to about 1,600 people.

Related articles:

Volvo partners with Aurora for autonomous hub-to-hub trucking

PACCAR and Aurora to build autonomous trucks

Uber hands over autonomous driving unit to Aurora

Click for more FreightWaves articles by Alan Adler.