An increase in the use of special purpose acquisition companies (SPAC) for raising investment for electric vehicle start-ups could damage the long-term prospects of the industry, Mate Rimac, founder of electric hypercar maker Rimac, said.
Managers of SPAC companies are not held to a similar level of liability regarding possible growth prospects as managers who raise cash through an initial public offering (IPO) on equity markets, spurring concerns regarding an investor bubble.
“You can get so much money now for companies that do not have a product. Personally, I am scared a little bit,” Rimac said on Thursday.
“When we go public, I want to show the numbers, to go public on reality, and not on hype,” Rimac added.
“I hope that these SPACs will be successful. A lot of them won’t. I hope it won’t hurt the industry too much.”
SPACs are small firms with an established track record of filings at the United States Securities and Exchange Commission (SEC) which are then used for purchasing up promising companies in high-growth sectors.
Wall Street has used SPACs to sidestep the IPO process, with their shorter preparation time and less legal obstacles making it easier to tap the investor optimism towards electric vehicles that helped Tesla reach a $554 billion valuation.
“We were profitable last year, and we want to be profitable this year as well,” Rimac said, adding that he made his company, which was founded in Croatia in 2009 and has now hired 900 people, by concentrating on profitability instead of growth.
“For a start-up, we have built up steam the hard way,” he said, adding that sometimes he feels like he is missing out by not selecting the SPAC path.
Rimac had a hard time raising money in 2011 after electric automaker Fisker went bankrupt and with Tesla yet to form itself as a high growth company.
Rimac was thus forced to raise money by taking on development contracts for other automakers. Today automakers such as Porsche, Kia, and Hyundai are shareholders and Rimac makes electric powertrains for supercars constructed by Aston Martin, Koenigsegg, and others.
“We started with hypercars and we are now working with more mainstream vehicles,” Rimac said. “Want to be the leader in high-performance electric vehicle components. Want to be the intel inside.”
Rimac refused to discuss the speculation that he would buy Bugatti, but added cryptically “maybe soon”.
