AN IPO FREEZE
Good morning, Term Sheet readers.
Looks like the government shutdown is having an effect on the IPO market.
We were supposed to kick off 2019 with a wave of IPOs, including some of the biggest tech offerings we’ve seen in years. Well, we’re not off to great start.
According to a WSJ report, the partial closure of the Securities and Exchange Commission is forcing companies that were planning to list shares in January to sit on the sidelines for now. The companies affected include biotechnology firms Gossamer Bio Inc., Alector Inc. and Blackstone Group LP’s Alight Solutions LLC.
As part of the shutdown, the SEC has furloughed thousands of employees and stopped reviewing and approving all new and pending corporate registration statements. The WSJ reports that dozens of SEC accountants and lawyers who review IPO paperwork are prohibited from reading email or calling deal lawyers seeking to discuss complex disclosure questions.
Don’t worry though, tech startups like Uber and Lyft that are planning IPOs in 2019 shouldn’t be affected — they can just wait out the shutdown. It’s the biotech companies that are most worried as many go public early in the year in efforts to raise capital for drug development.
The bigger question here is what happens when the government re-opens? Depending on how long the shutdown lasts, the backlog of requests could be crippling and the effects far-reaching. To echo Alan Denenberg’s question in the WSJ: “How does the SEC unbury itself and in what order?”
BIG MONEY: Aurora, the self-driving startup, is raising more capital, according to a new report in Recode. The company is expected to rake in approximately $500 million in fresh funding in a round led by Sequoia Capital. The deal would value the company at more than $2 billion, which is a 4x increase to its most recent valuation. Aurora works with automakers to design and develop a package of sensors, software, and data services (ie: the “full stack”) needed to deploy fully autonomous vehicles. So far, it has partnered with manufacturers including Volkswagen, Hyundai and Byton in efforts to integrate its technology in their cars.
But just how far are we from an autonomous vehicle reality? Well, pretty far. On Monday, a panel of experts at a Fortune dinner in Las Vegas Monday night discussed the evolution of transportation. Karen Francis, a participant on the panel who invests in and advises various mobility-focused companies, cautioned that the transformation of the automotive industry into a so-called mobility industry will not happen overnight. “It will be messy,” the alumnus of Ford and General Motors said.
Although the path to autonomous vehicle adoption will be slow, messy, and painful, the impending upheaval will be, she said, “one of the fundamental, structural societal changes in our lifetime.”
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