(Bloomberg) — Facing technical and financial challenges, Uber Technologies Inc. was under pressure last year to bring on new leadership and investors for its autonomous-driving project. It found both in Aurora Innovation Inc.
The resulting deal between the two companies was tested by public investors for the first time Thursday, when Aurora began trading. The shares rose 15% when the market opened.
Aurora listed on the Nasdaq after merging with Reinvent Technology Partners Y, a special purpose acquisition company led by LinkedIn co-founder Reid Hoffman and Zynga Inc.’s Mark Pincus. The merger valued the self-driving car developer at about $13 billion. Uber, by far the largest shareholder, has a stake worth about $3.28 billion.
Uber and other major shareholders, including Sequoia Capital, Index Ventures and Aurora’s founders, can’t sell their shares for four years. The rule is designed to provide stability and demonstrate to new investors that the company is committed to a technology that is likely to take many years to pay off, if it ever does.
“This is trying to signal to the market, Look, this is not a short-term, flip-it bet,” Aurora Chief Executive Officer Chris Urmson said in an interview last month with the financial news podcast Benzinga. “We’re going to grow and create value here.”
Urmson will ring the bell of the Nasdaq Thursday morning as Aurora begins trading under the symbol AUR. Aurora has manufacturing partnerships with Paccar Inc., Volvo Group and Toyota Motor Corp., and vehicles outfitted with Aurora’s autonomous tech will be in Times Square.
Aurora is one of the first autonomous-vehicle startups to go public. It follows TuSimple Holdings Inc., the developer of autonomous trucks on the road in Texas and Arizona, which raised $1.35 billion in an initial public offering in April.
Read more: Aurora might just beat Google to autonomous driving
Before starting Aurora, Urmson worked with a founder of Uber’s self-driving car project, Anthony Levandowski, at Alphabet Inc.’s Waymo. The two men clashed, and each left to work on competing startups. Urmson co-founded Aurora in 2017 with a goal of building autonomous hardware and software that can be integrated into vehicles.
Aurora’s technology relies on innovations in lidar, which uses lasers to build a three-dimensional image of the surrounding landscape and help perceive and plan around obstacles in the road. Its first commercial pilot, with FedEx Corp., has Aurora-outfitted Paccar trucks delivering packages along FedEx’s Dallas-to-Houston route. The trucks are operating autonomously, with a backup driver behind the wheel as an additional safety measure.
Aurora and Uber joined forces last year when Uber agreed to invest $400 million and hand over its autonomous-vehicle division to the upstart. That allowed Uber to offload a pricey project in exchange for a stake in Aurora and the ability to influence future decisions with a board seat for Uber Chief Executive Officer Dara Khosrowshahi.
The accord with Uber is important for two main reasons, according to Mike Volpi, a partner at Index Ventures. It will provide access to Uber’s global ride-hailing and delivery network and a trove of data. Uber agreed to give Aurora insights into its network over the next decade. “Uber ATG gave us a lot,” Volpi told Bloomberg.
Building self-driving cars proved to be much more difficult than anyone imagined. That’s true for several of the world’s most valuable companies, including Alphabet, Amazon.com Inc., Apple Inc. and Tesla Inc. Aurora’s goal is to introduce a limited number of self-driving trucks by the end of 2023 and passenger vehicles by 2024.
(Updates with shares in the second paragraph.)
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