SA国际传媒

Morning Markets: What loses money and isn鈥檛 commercial ready to fly autonomously? This IPO.

Another Chinese company has on the American market this week, this time it鈥檚 .

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Ehang, which makes autonomous aerial vehicles, filed paperwork with the Securities and Exchange Commission to go public on the Nasdaq. The company lists a $100 million raised in its IPO documents, a standard placeholder figure meant to help investors gauge the possible size of the offering.

As a private company, Ehang raised $52 million in known venture capital, with its most recent round being a in August 2015. Ehang is a fairly young company, as it was founded in 2014, according to SA国际传媒. It also stands out in the crowd of startups we鈥檝e seen go public this year, being a much younger company with less venture funding than others we鈥檝e written about in 2019.

Ehang raised $10 million in its in December 2014, less than a year before its $42 million in August 2015. It counts and as investors. and are among the underwriters for the company鈥檚 IPO.

With everything we hear about companies burning through cash to make self-driving cars a reality, it鈥檚 a nice change of pace to hear about a company grinding to make self-flying planes a reality. Let鈥檚 see how they鈥檙e doing, money-wise.

Financial Results

Ehang is a nascent company with modest revenue and regular losses. It doesn鈥檛 fit the profile of companies that we鈥檝e covered lately. Think of it more like a biotech offering. Here鈥檚 a company working on getting its product to the point of commercial viability; you can invest in that if you鈥檇 like, but it鈥檚 risk profile is a bit different than a SaaS company.

Indeed, Ehang鈥檚 F-1 filing notes that it has only delivered 鈥�38 passenger-grade AAVs for testing.鈥� AAV is an acronym for 鈥渁utonomous aerial vehicle. Aside from the three dozen testing AAVs, the company has also 鈥渄eveloped two command-and-control centers for smart city management.鈥�

Ehang鈥檚 F-1 filing does note that the company has 鈥渦nfilled purchase orders for 28 passenger-grade AAVs.鈥�

As you can imagine, it鈥檚 income statement doesn鈥檛 include rapid growth. The company鈥檚 revenues fell nearly 16 in the first half of 2019 compared to the same period of 2018, with just $4.7 million in revenue during the first six months of this year. Ehang鈥檚 H1 2019 net loss of $5.5 million was up 42 percent from the year-ago period.

The AAV company had $8.8 million in cash and equivalents on-hand at the end of Q2 2019. With $5.8 million in operating cash burn in the first half of 2019 you can see why the firm is raising more capital through an IPO.

Ehang raised several known rounds (Crunhbase has previously mentioned notes on its Series A and Series B). The company鈥檚 F-1 filing discloses some seed funding and a Series C that were previously unknown to external parties. (Indeed all H1 2019 cash from financing that the company secured came from its Series C, the document says.)

The company notes in its filing that it intends to use its net IPO proceeds to fund its operations (research and development and sales and marketing) 鈥渆xpanding production capacity,鈥� and 鈥渄eveloping urban air mobility solutions, such as passenger air mobility services and urban air logistics services, and 鈥漡eneral corporate purposes.鈥�

We don鈥檛 see too many IPOs like this one. It harks back to , an electric car company from China that also had a limited history of product delivery and revenue generation. That one didn鈥檛 go well, with NIO鈥檚 stock losing nearly all its value after the offering. Perhaps Ehang will prove more successful.

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