Fisker faced financial distress as early as last August

by with No Comment Tech

Fisker CEO Henrik Fisker speaks during their inaugural "Product Vision Day" in Huntington Beach, California, on August 3, 2023. (Photo by FREDERIC J. BROWN/AFP via Getty Images)

Image Credits: FREDERIC J. BROWN/AFP / Getty Images

Fisker was facing “potential financial distress” as early as last August, according to a new filing in its Chapter 11 bankruptcy proceeding, which the EV startup initiated earlier this week.

The admission provides a clearer picture of Fisker’s troubles in 2023 as it struggled to ramp up deliveries of its flagship Ocean SUV, despite CEO Henrik Fisker’s assurances to the public at the time. In August 2023, even as Fisker’s financial health began to wane, the company held a “Product Vision Day” event to promote multiple new models in development, including a low-cost EV and an electric pickup truck.

“Fisker isn’t standing still,” Henrik Fisker said at the time. “We want the world to know that we have big plans and intend to move into several different segments, redefining each with our unique blend of design, innovation, and sustainability.”

That looming financial distress drove Fisker to solicit a partnership or investment from another automaker, according to the filing, which was written by the startup’s appointed chief restructuring officer. Talks with that automaker, which Reuters first reported to be Nissan, dragged on for months before falling apart earlier this year, putting Fisker in “a precarious position,” according to the filing. Fisker ultimately stopped production of the Ocean earlier this year, went through multiple rounds of layoffs, and is now beginning the bankruptcy process.

The Chapter 11 proceedings are meant to offer Fisker some “breathing room” to “stabilize operations while pursuing an orderly and efficient liquidation of assets.” With so many creditors and debts, it’s unclear whether the company will operate in any meaningful way once those assets are gone.

One of the more immediate issues set to be resolved in the case is what happens to the remaining Fisker Oceans that have gone unsold. Brian Resnick, a lawyer for Davis Polk who is representing Fisker in the Chapter 11 case, said in a hearing Friday that the company has reached an “agreement in principle” to sell the 4,300 unsold Oceans to an unnamed vehicle leasing company.

“We find ourselves in the situation of needing to seek approval of this sale on short notice,” Resnick said, though he noted that the lawyers working on behalf of Fisker still need to file an official motion to execute any such sale.

The money generated by that or any other sales of Fisker’s assets will likely go right to Fisker’s largest (and only) secured creditor, Heights Capital Management, an affiliate of financial services giant Susquehanna International Group.

Heights loaned more than $500 million to Fisker in 2023, with the option to convert that debt to stock in the company. Fisker was late filing its third quarter financial report with the SEC, which breached a covenant of that deal with Heights. To repair that breach, Fisker granted Heights “first-priority security interest on all existing and future assets.” Further breaches in the coming months put Heights in the driver’s seat of Fisker’s financial situation.

And yet, Fisker says in the Chapter 11 filings that it still owes Heights more than $183 million in principal payments.

Fisker has other assets beyond the Ocean SUVs that it can sell in the Chapter 11 process, including equipment that contract manufacturer Magna used to build the vehicles. There are 180 assembly robots, an entire underbody line, a paint shop and other tools. Fisker hasn’t yet offered a specific accounting of those assets or their value, saying only that its total assets range between $500 million and $1 billion. Some of them are “specialized,” meaning it could be hard to find a buyer who sees value in them.

Fisker also says in one of the filings that its low-cost Pear EV was in “advanced development,” and that the Alaska pickup truck was in “late-stage development.” It’s unclear at the moment what, if any, value those vehicle designs carry. Prior to its bankruptcy filing, Fisker was sued by Bertrandt AG, the engineering firm it hired to co-develop both of those vehicles. That firm is now one of Fisker’s largest unsecured creditors in the bankruptcy case.

Alex Lees, a lawyer representing another group of unsecured creditors to whom Fisker owes more than $600 million, raised concerns during the hearing that it took “too long” for Fisker to file for bankruptcy. He called Fisker’s relationship with Heights a “lopsided transaction” and a “terrible deal for [Fisker] and its creditors.” Scott Greissman, a lawyer representing the investment arm of Heights, said Lees’ comments were “completely inappropriate, completely unsupported.

The filings to date offer the rawest look yet at the diminished state of Fisker. The company claims to be down to 400 employees globally, with around 181 remaining in the U.S., 70 in Germany, 23 in Austria and 57 in India. That represents a 75% reduction from the company’s peak.

Fisker also has around $4 million remaining in its various bank accounts, according to another filing. It has about another $6 million in restricted cash. Fisker plans to sell nearly $400,000 worth of stock it owns in European charging network Allego to help offset the costs of continuing parts of the business, according to a budget filed Friday. It expects to spend around $1.7 million over the next two weeks on employee payroll and benefits. It is not currently budgeting any spending on IT/Software, after-sales service or vehicle buybacks.

The AI financial results paradox

by with No Comment Tech

Futuristic blue and purple circuit board.

Image Credits: Berkah / Getty Images

There is a general consensus today that generative AI is going to transform business in a profound way, and companies and individuals who don’t get on board will be quickly left in the dustbin of history.

At the same time, as companies delve more deeply into this technology, they want proof, actual business metrics, that show how AI is actually improving business performance and revenue.

They can’t and shouldn’t trust vendor promises alone. Yet it’s not easy to make a direct correlation between something like, say, Microsoft Copilot, and overall business performance.

Should CIOs simply take it on faith, then? In this week’s Clouded Judgement newsletter, investor Jamin Ball suggests that most businesses might not have a choice. In his view, they might not see the results for some time, leaving them to make a very tough buying decision.

Here’s Ball’s take:

Right now the world is evolving — AI is a massive platform shift. And by NOT adopting / spending on it, you risk losing market share and slowly becoming irrelevant. Because your competitors are investing in AI efforts, you also have to invest in AI efforts. At the end of the day these investments might not immediately result in better business outcomes (i.e., more revenue), but they certainly lead to better end user experiences. And very well may lead to better “other” metrics like retention or churn. If your competitors are building better end user experiences and you’re not, then you may find yourself in trouble in the short / medium term.

Yet CIOs want more certainty than that before they go blindly into an expensive new technology, no matter how game-changing it could be. They and the company CFO have to deal with the reality of the here and now when it comes to justifying expenses, and if they are spending big money, when can they reasonably expect to get a return on their investment?

At the same time, those who use the electricity analogy for AI may believe that this is AI’s electricity moment — that moment in the late 18th century when factories began switching over from steam to electricity. You could ignore it and continue along with steam, but at some point you were going to get steamrolled (pun intended).

Perhaps the answer could lie with some savvy startup, or more likely enterprises of a certain size will turn to the usual suspects — Deloitte, McKinsey and Accenture — and pay them a hefty fee to help them figure it out. Ironically, that will just increase the cost and the time to value.

As the Grateful Dead’s Jerry Garcia once sang in “The Wheel,” “You can’t go back and you can’t stand still. If the thunder won’t get you, then the lightning will.” CIOs trying to figure out how to proceed are left to decide whether they are marching their companies steadily toward the future or throwing good money after bad.

Astor’s 'community' approach to financial advice aims to help women feel more confident about investing

by with No Comment Tech

Astor, Lindsay Dorf, investment app

Image Credits: Astor / Astor founder Lindsay Dorf

Among her friends, Lindsay Dorf is the one with the superpower of being able to understand retail investing. So much so that she became the go-to person for advice.

“I had a lot of friends come to me asking for investing advice,” Dorf told TechCrunch. “There were two things I really saw: One, the people around me, they were brilliant, but didn’t have confidence in investing. The other was that there was so much that we’d figured out on the institutional side, from my time at BlackRock, that just hadn’t made it to the retail investor sector.”

She started thinking about creating her own tool that she could put in front of her friends to help them grow confidence in investing, particularly her women friends. That’s how Astor, a free personal finance platform for women that merges community and investing in an approachable way, came to be. It’s through the community that women can feel more comfortable asking if they are making the right decisions, Dorf said.  

After a user downloads Astor, they input all of their bank and brokerage information into the app to understand the user’s current financial situation. Users will be able to see the network of funds available, for example, an emergency fund, savings goals, retirement investment accounts and personal investment accounts. 

It’s similar to what the former financial planning app Mint would do to give a picture of someone’s net worth, Dorf said. That said, Astor is not a brokerage, and users can’t trade on the platform today.

Digital investing platform for women, Ellevest, expands into banking

Astor also provides investing breakdowns to show annual returns and the user’s investment strategy versus the market, like the S&P 500. Holdings are broken down by performance, asset class and returns.

There’s also a gamified feature called Path to Wealth that takes a user’s money strategy and uses insights as sort of a “Game of Life” to simplify the financial journey, like starting an emergency fund, and once that is ready, what new savings goals are attainable and approachable.

“We help you on this journey to figure out what’s your current state and what you’re ready for,” Dorf said.

Here’s where the community aspect comes in: With investments, users can compare their returns and portfolio breakdowns to other users. To value privacy, users only see the percent allocations, but never the invested dollar amounts, Dorf said.

“You can see your own risk and return for investments, then look at my profile and see my risk and return,” she said. “For example your risk could be higher, but your return is lower compared to my investments. You can then go into the app and start a conversation about why that is. To learn from them why they created the strategy they did, which empowers users.”

Astor, investment app
Example of Astor’s social and wealth dashboards.
Image Credits: Astor

Why focus on women? Astor’s research found that women are three times more likely to be confident investing when they know what people similar to them are doing with their money. However, they aren’t finding it in some of the other social investing platforms, for example, eToro, where most of the users are male, Dorf said.

Women-focused fintech is quite a crowded space already, with companies like Frich, Alinea, Ellevest, Your Juno and Clever Girl Finance, which Dorf considers competitors.

However, Dorf said Astor is different in a few ways. One, many of the apps are more in the classic financial aggregation space, think budgeting, where Astor’s big focus is on investments. Another is that community functionality and helping people be more confident in the strategy they choose and to learn from people in the community, who are similar to you or have similar goals, about what’s best in the short and long terms. 

“It’s a lot less about Astor giving advice, and a lot more about you joining the platform, figuring out your situation and then using your community to make the decision that you want to make,” Dorf said.

Former teen model co-created app Frich to help Gen Z be more realistic about finances

In addition, Dorf’s background gives her an edge. Her first job out of college 10 years ago was part of BlackRock’s fintech platform called Aladdin, building products for portfolio managers. She continued her top-notch career education at Google, where she learned how to build tools for consumers and iterate on those tools with users. 

When Dorf was ready to start building Astor in 2021, she applied to the two-year MS/MBA program at Harvard, which is a joint program between the schools of engineering and business. She called it “a bit like an incubator: You do the engineering piece of actually building a product, and the business piece of bringing it to market.”

While at Harvard, Dorf entered and won some business plan competitions. That initial funding from NFX and MBA Fund enabled Astor to hire an engineering team and start building in the second part of the second year in the program.

In March, the company closed on a total of $1.4 million from Stellation Capital, TMV, NFX, MBA Fund and a group of angel investors. This enabled the company to hire additional engineering, design and marketing employees so that it could open its waitlist in April and bring over 2,000 users onto the platform by the end of May.

Earlier this month, the company took away the waitlist and now has over 3,000 users. The audience is mostly women, ages 20 to 35 years old. Hundreds of conversations are started on the platform each week, so Astor just brought on certified financial planners to offer coaching to users.

Dorf declined to share more about how the company makes money at this time, saying, “Right now, we’re learning from our audience, and will be introducing new features and offerings in the upcoming months.”

From here, much of the company’s focus will be on product development, building the user base and the community.

“We want our audience to see financial health as part of your overall health,” Dorf said. “When you’re stressed about your money, it’s a massive source of anxiety for you. Over the next few months, we’re creating that pillar of financial wellness and new features users are asking for.”

Fisker faced financial distress as early as last August

by with No Comment Tech

Fisker CEO Henrik Fisker speaks during their inaugural "Product Vision Day" in Huntington Beach, California, on August 3, 2023. (Photo by FREDERIC J. BROWN/AFP via Getty Images)

Image Credits: FREDERIC J. BROWN/AFP / Getty Images

Fisker was facing “potential financial distress” as early as last August, according to a new filing in its Chapter 11 bankruptcy proceeding, which the EV startup initiated earlier this week.

The admission provides a clearer picture of Fisker’s troubles in 2023 as it struggled to ramp up deliveries of its flagship Ocean SUV, despite CEO Henrik Fisker’s assurances to the public at the time. In August 2023, even as Fisker’s financial health began to wane, the company held a “Product Vision Day” event to promote multiple new models in development, including a low-cost EV and an electric pickup truck.

“Fisker isn’t standing still,” Henrik Fisker said at the time. “We want the world to know that we have big plans and intend to move into several different segments, redefining each with our unique blend of design, innovation, and sustainability.”

That looming financial distress drove Fisker to solicit a partnership or investment from another automaker, according to the filing, which was written by the startup’s appointed chief restructuring officer. Talks with that automaker, which Reuters first reported to be Nissan, dragged on for months before falling apart earlier this year, putting Fisker in “a precarious position,” according to the filing. Fisker ultimately stopped production of the Ocean earlier this year, went through multiple rounds of layoffs, and is now beginning the bankruptcy process.

The Chapter 11 proceedings are meant to offer Fisker some “breathing room” to “stabilize operations while pursuing an orderly and efficient liquidation of assets.” With so many creditors and debts, it’s unclear whether the company will operate in any meaningful way once those assets are gone.

One of the more immediate issues set to be resolved in the case is what happens to the remaining Fisker Oceans that have gone unsold. Brian Resnick, a lawyer for Davis Polk who is representing Fisker in the Chapter 11 case, said in a hearing Friday that the company has reached an “agreement in principle” to sell the 4,300 unsold Oceans to an unnamed vehicle leasing company.

“We find ourselves in the situation of needing to seek approval of this sale on short notice,” Resnick said, though he noted that the lawyers working on behalf of Fisker still need to file an official motion to execute any such sale.

The money generated by that or any other sales of Fisker’s assets will likely go right to Fisker’s largest (and only) secured creditor, Heights Capital Management, an affiliate of financial services giant Susquehanna International Group.

Heights loaned more than $500 million to Fisker in 2023, with the option to convert that debt to stock in the company. Fisker was late filing its third quarter financial report with the SEC, which breached a covenant of that deal with Heights. To repair that breach, Fisker granted Heights “first-priority security interest on all existing and future assets.” Further breaches in the coming months put Heights in the driver’s seat of Fisker’s financial situation.

And yet, Fisker says in the Chapter 11 filings that it still owes Heights more than $183 million in principal payments.

Fisker has other assets beyond the Ocean SUVs that it can sell in the Chapter 11 process, including equipment that contract manufacturer Magna used to build the vehicles. There are 180 assembly robots, an entire underbody line, a paint shop and other tools. Fisker hasn’t yet offered a specific accounting of those assets or their value, saying only that its total assets range between $500 million and $1 billion. Some of them are “specialized,” meaning it could be hard to find a buyer who sees value in them.

Fisker also says in one of the filings that its low-cost Pear EV was in “advanced development,” and that the Alaska pickup truck was in “late-stage development.” It’s unclear at the moment what, if any, value those vehicle designs carry. Prior to its bankruptcy filing, Fisker was sued by Bertrandt AG, the engineering firm it hired to co-develop both of those vehicles. That firm is now one of Fisker’s largest unsecured creditors in the bankruptcy case.

Alex Lees, a lawyer representing another group of unsecured creditors to whom Fisker owes more than $600 million, raised concerns during the hearing that it took “too long” for Fisker to file for bankruptcy. He called Fisker’s relationship with Heights a “lopsided transaction” and a “terrible deal for [Fisker] and its creditors.” Scott Greissman, a lawyer representing the investment arm of Heights, said Lees’ comments were “completely inappropriate, completely unsupported.

The filings to date offer the rawest look yet at the diminished state of Fisker. The company claims to be down to 400 employees globally, with around 181 remaining in the U.S., 70 in Germany, 23 in Austria and 57 in India. That represents a 75% reduction from the company’s peak.

Fisker also has around $4 million remaining in its various bank accounts, according to another filing. It has about another $6 million in restricted cash. Fisker plans to sell nearly $400,000 worth of stock it owns in European charging network Allego to help offset the costs of continuing parts of the business, according to a budget filed Friday. It expects to spend around $1.7 million over the next two weeks on employee payroll and benefits. It is not currently budgeting any spending on IT/Software, after-sales service or vehicle buybacks.

The AI financial results paradox

by with No Comment Tech

Futuristic blue and purple circuit board.

Image Credits: Berkah / Getty Images

There is a general consensus today that generative AI is going to transform business in a profound way, and companies and individuals who don’t get on board will be quickly left in the dustbin of history.

At the same time, as companies delve more deeply into this technology, they want proof, actual business metrics, that show how AI is actually improving business performance and revenue.

They can’t and shouldn’t trust vendor promises alone. Yet it’s not easy to make a direct correlation between something like, say, Microsoft Copilot, and overall business performance.

Should CIOs simply take it on faith, then? In this week’s Clouded Judgement newsletter, investor Jamin Ball suggests that most businesses might not have a choice. In his view, they might not see the results for some time, leaving them to make a very tough buying decision.

Here’s Ball’s take:

Right now the world is evolving — AI is a massive platform shift. And by NOT adopting / spending on it, you risk losing market share and slowly becoming irrelevant. Because your competitors are investing in AI efforts, you also have to invest in AI efforts. At the end of the day these investments might not immediately result in better business outcomes (i.e., more revenue), but they certainly lead to better end user experiences. And very well may lead to better “other” metrics like retention or churn. If your competitors are building better end user experiences and you’re not, then you may find yourself in trouble in the short / medium term.

Yet CIOs want more certainty than that before they go blindly into an expensive new technology, no matter how game-changing it could be. They and the company CFO have to deal with the reality of the here and now when it comes to justifying expenses, and if they are spending big money, when can they reasonably expect to get a return on their investment?

At the same time, those who use the electricity analogy for AI may believe that this is AI’s electricity moment — that moment in the late 18th century when factories began switching over from steam to electricity. You could ignore it and continue along with steam, but at some point you were going to get steamrolled (pun intended).

Perhaps the answer could lie with some savvy startup, or more likely enterprises of a certain size will turn to the usual suspects — Deloitte, McKinsey and Accenture — and pay them a hefty fee to help them figure it out. Ironically, that will just increase the cost and the time to value.

As the Grateful Dead’s Jerry Garcia once sang in “The Wheel,” “You can’t go back and you can’t stand still. If the thunder won’t get you, then the lightning will.” CIOs trying to figure out how to proceed are left to decide whether they are marching their companies steadily toward the future or throwing good money after bad.

Astor’s 'community' approach to financial advice aims to help women feel more confident about investing

by with No Comment Tech

Astor, Lindsay Dorf, investment app

Image Credits: Astor / Astor founder Lindsay Dorf

Among her friends, Lindsay Dorf is the one with the superpower of being able to understand retail investing. So much so that she became the go-to person for advice.

“I had a lot of friends come to me asking for investing advice,” Dorf told TechCrunch. “There were two things I really saw: One, the people around me, they were brilliant, but didn’t have confidence in investing. The other was that there was so much that we’d figured out on the institutional side, from my time at BlackRock, that just hadn’t made it to the retail investor sector.”

She started thinking about creating her own tool that she could put in front of her friends to help them grow confidence in investing, particularly her women friends. That’s how Astor, a free personal finance platform for women that merges community and investing in an approachable way, came to be. It’s through the community that women can feel more comfortable asking if they are making the right decisions, Dorf said.  

After a user downloads Astor, they input all of their bank and brokerage information into the app to understand the user’s current financial situation. Users will be able to see the network of funds available, for example, an emergency fund, savings goals, retirement investment accounts and personal investment accounts. 

It’s similar to what the former financial planning app Mint would do to give a picture of someone’s net worth, Dorf said. That said, Astor is not a brokerage, and users can’t trade on the platform today.

Digital investing platform for women, Ellevest, expands into banking

Astor also provides investing breakdowns to show annual returns and the user’s investment strategy versus the market, like the S&P 500. Holdings are broken down by performance, asset class and returns.

There’s also a gamified feature called Path to Wealth that takes a user’s money strategy and uses insights as sort of a “Game of Life” to simplify the financial journey, like starting an emergency fund, and once that is ready, what new savings goals are attainable and approachable.

“We help you on this journey to figure out what’s your current state and what you’re ready for,” Dorf said.

Here’s where the community aspect comes in: With investments, users can compare their returns and portfolio breakdowns to other users. To value privacy, users only see the percent allocations, but never the invested dollar amounts, Dorf said.

“You can see your own risk and return for investments, then look at my profile and see my risk and return,” she said. “For example your risk could be higher, but your return is lower compared to my investments. You can then go into the app and start a conversation about why that is. To learn from them why they created the strategy they did, which empowers users.”

Astor, investment app
Example of Astor’s social and wealth dashboards.
Image Credits: Astor

Why focus on women? Astor’s research found that women are three times more likely to be confident investing when they know what people similar to them are doing with their money. However, they aren’t finding it in some of the other social investing platforms, for example, eToro, where most of the users are male, Dorf said.

Women-focused fintech is quite a crowded space already, with companies like Frich, Alinea, Ellevest, Your Juno and Clever Girl Finance, which Dorf considers competitors.

However, Dorf said Astor is different in a few ways. One, many of the apps are more in the classic financial aggregation space, think budgeting, where Astor’s big focus is on investments. Another is that community functionality and helping people be more confident in the strategy they choose and to learn from people in the community, who are similar to you or have similar goals, about what’s best in the short and long terms. 

“It’s a lot less about Astor giving advice, and a lot more about you joining the platform, figuring out your situation and then using your community to make the decision that you want to make,” Dorf said.

Former teen model co-created app Frich to help Gen Z be more realistic about finances

In addition, Dorf’s background gives her an edge. Her first job out of college 10 years ago was part of BlackRock’s fintech platform called Aladdin, building products for portfolio managers. She continued her top-notch career education at Google, where she learned how to build tools for consumers and iterate on those tools with users. 

When Dorf was ready to start building Astor in 2021, she applied to the two-year MS/MBA program at Harvard, which is a joint program between the schools of engineering and business. She called it “a bit like an incubator: You do the engineering piece of actually building a product, and the business piece of bringing it to market.”

While at Harvard, Dorf entered and won some business plan competitions. That initial funding from NFX and MBA Fund enabled Astor to hire an engineering team and start building in the second part of the second year in the program.

In March, the company closed on a total of $1.4 million from Stellation Capital, TMV, NFX, MBA Fund and a group of angel investors. This enabled the company to hire additional engineering, design and marketing employees so that it could open its waitlist in April and bring over 2,000 users onto the platform by the end of May.

Earlier this month, the company took away the waitlist and now has over 3,000 users. The audience is mostly women, ages 20 to 35 years old. Hundreds of conversations are started on the platform each week, so Astor just brought on certified financial planners to offer coaching to users.

Dorf declined to share more about how the company makes money at this time, saying, “Right now, we’re learning from our audience, and will be introducing new features and offerings in the upcoming months.”

From here, much of the company’s focus will be on product development, building the user base and the community.

“We want our audience to see financial health as part of your overall health,” Dorf said. “When you’re stressed about your money, it’s a massive source of anxiety for you. Over the next few months, we’re creating that pillar of financial wellness and new features users are asking for.”

Fisker faced financial distress as early as last August

by with No Comment Tech

Fisker CEO Henrik Fisker speaks during their inaugural "Product Vision Day" in Huntington Beach, California, on August 3, 2023. (Photo by FREDERIC J. BROWN/AFP via Getty Images)

Image Credits: FREDERIC J. BROWN/AFP / Getty Images

Fisker was facing “potential financial distress” as early as last August, according to a new filing in its Chapter 11 bankruptcy proceeding, which the EV startup initiated earlier this week.

The admission provides a clearer picture of Fisker’s troubles in 2023 as it struggled to ramp up deliveries of its flagship Ocean SUV, despite CEO Henrik Fisker’s assurances to the public at the time. In August 2023, even as Fisker’s financial health began to wane, the company held a “Product Vision Day” event to promote multiple new models in development, including a low-cost EV and an electric pickup truck.

“Fisker isn’t standing still,” Henrik Fisker said at the time. “We want the world to know that we have big plans and intend to move into several different segments, redefining each with our unique blend of design, innovation, and sustainability.”

That looming financial distress drove Fisker to solicit a partnership or investment from another automaker, according to the filing, which was written by the startup’s appointed chief restructuring officer. Talks with that automaker, which Reuters first reported to be Nissan, dragged for months before falling apart earlier this year, putting Fisker in “a precarious position,” according to the filing. Fisker ultimately stopped production of the Ocean earlier this year, went through multiple rounds of layoffs, and is now beginning the bankruptcy process.

The Chapter 11 proceedings are meant to offer Fisker some “breathing room” to “stabilize operations while pursuing an orderly and efficient liquidation of assets.” With so many creditors and debts, its unclear whether the company will operate in any meaningful way once those assets are gone.

One of more immediate issues set to be resolved in the case is what happens to the remaining Fisker Oceans that have gone unsold. Brian Resnick, a lawyer for Davis Polk who is representing Fisker in the Chapter 11 case, said in a hearing Friday that the company has reached an “agreement in principle” to sell the 4,300 unsold Oceans to an unnamed vehicle leasing company.

“We find ourselves in the situation of needing to seek approval of this sale on short notice,” Resnick said, though he noted that the lawyers working on behalf of Fisker still need to file an official motion to execute any such sale.

The money generated by that or any other sales of Fisker’s assets will likely go right to Fisker’s largest (and only) secured creditor, Heights Capital Management, an affiliate of financial services giant Susquehanna International Group.

Heights loaned more than $500 million to Fisker in 2023, with the option to convert that debt to stock in the company. Fisker was late filing its third quarter financial report with the SEC, which breached a covenant of that deal with Heights. To repair that breach, Fisker granted Heights “first-priority security interest on all existing and future assets.” Further breaches in the coming months put Heights in the driver’s seat of Fisker’s financial situation.

And yet, Fisker says in the Chapter 11 filings that it still owes Heights more than $183 million in principal payments to Heights.

Fisker has other assets beyond the Ocean SUVs that it can sell in the Chapter 11 process, including equipment that contract manufacturer Magna used to build the vehicles. There are 180 assembly robots, an entire underbody line, a paint shop, and other tools. Fisker hasn’t yet offered a specific accounting of those assets or their value, saying only that its total assets range between $500 million and $1 billion. Some of them are “specialized,” meaning it could be hard to find a buyer who sees value in them.

Fisker also says in one of the filings that its low-cost Pear EV was in “advanced development,” and that the Alaska pickup truck was in “late-stage development.” It’s unclear at the moment what, if any, value those vehicle designs carry. Prior to its bankruptcy filing, Fisker was sued by Bertrandt AG, the engineering firm it hired to co-develop both of those vehicles. That firm is now one of Fisker’s largest unsecured creditors in the bankruptcy case.

Alex Lees, a lawyer representing another group of unsecured creditors to whom Fisker owes more than $600 million, raised concerns during the hearing that it took “too long” for Fisker to file for bankruptcy. He called Fisker’s relationship with Heights a “lopsided transaction” and a “terrible deal for [Fisker] and its creditors.” Scott Greissman, a lawyer representing the investment arm of Heights, said Lees’ comments were “completely inappropriate, completely unsupported.

The filings to date offer the rawest look yet at the diminished state of Fisker. The company claims to be down to 400 employees globally, with around 181 remaining in the U.S., 70 in Germany, 23 in Austria, and 57 in India. That represents a 75% reduction from the company’s peak.

Fisker also has around $4 million remaining in its various bank accounts, according to another filing. It has about another $6 million in restricted cash. Fisker plans to sell nearly $400,000 worth of stock it owns in European charging network Allego to help offset the costs of continuing parts of the business, according to a budget filed Friday. It expects to spend around $1.7 million over the next two weeks on employee payroll and benefits. It is not currently budgeting any spending on IT/Software, after sales service, or vehicle buybacks.

UiPath CEO Rob Enslin in front of UiPath logo.

UiPath finds firmer financial footing with pivot to general automation and AI

by with No Comment Tech

UiPath CEO Rob Enslin in front of UiPath logo.

Image Credits: UiPath

Back in early 2021, it seemed everything was going right for UiPath. At a time when there were a number of high-flying enterprise startups, UiPath was at the top of the heap when it raised $750 million at a $35 billion valuation. In hindsight it was an outrageous overreach, but it felt pretty good at the time.

The company would go public, riding the wave of that gaudy valuation, and while it started strong in the public markets, it would fall to earth over the following year as the markets began to cool and investors started judging SaaS companies much more harshly. With a plunging stock price a year after going public, it was time to make a bold move.

That came when UiPath hired enterprise veteran Rob Enslin as co-CEO in 2022. He had spent 27 years at SAP and a couple more at Google Cloud, and he had the kind of enterprise management experience that the company required to pull itself out of the doldrums it found itself in.

It’s important to understand that up until Enslin came along, the company was mostly all-in on robotic process automation, or RPA, a way of automating mundane legacy processes by recording how a human does it and turning it into a digital process. But it turns out that RPA was a pretty small market, something that co-founder and CEO Daniel Dines recognized even before he hired Enslin.

Dines had begun looking at broadening the company’s focus with some small strategic acquisitions as early as 2019 and 2020 while the company was private, but it was up to Enslin to really implement a strategy to diversify the company.

He went to work reorganizing the company’s structure, sales motion and product focus. He took Dines’ original ideas and began to shift the company toward an automation platform approach that would allow his sales team to sell different products to customers instead of just a single RPA product, which came inherently with limitations.

Initially, the market wasn’t kind to the slowing growth that came with those changes. But over the last year, the stock has started to come back.

The transition

Even though some of the pieces were in place when Enslin arrived, he still had to shift how the company sold those pieces. Wall Street had already been changing how it values technology companies, even before he arrived.

“I think there was a reassessment of how investors were thinking about the technology, and they started imposing more fundamental rules about cost structures,” Maureen Fleming, an analyst at IDC who covers UiPath, told TechCrunch.

This resulted in investors rethinking the value of companies like UiPath, and the $35 billion private valuation didn’t really fit that new vision. “So that created a forcing function to put some discipline into running operations,” she said. That in turn gave Enslin the freedom to make some changes.

In 2022, he met with investors and laid out his plans to take the pieces he had and create a platform with three main areas: discover, automate and operate. “We had all the investors in front of us, and we laid out very clearly what our focus was going to be, and our focus was largely that customers needed more than RPA. They needed a platform, and we believe we had a platform,” Enslin told TechCrunch.

As part of that transition, there was also a massive go-to-market transformation where the company began to focus on expansion in large accounts. “We made certain that we went deep inside accounts, building great relationships, making certain we acquired customers that have the propensity to expand and to utilize automation in their business,” he said.

The company also started partnering with large organizations like Deloitte and Enslin’s former company, SAP. As a systems integrator, Deloitte could help sell and implement UiPath products. In some ways, SAP was a rival, but in other ways it was a natural partner because of the amount of automation required to implement complex solutions like SAP.

By last year, the company also began showcasing its approach to generative AI, which was turning the automation market on its head. Enslin said the company had existing relationships with OpenAI and it quietly developed a product, which it showed to investors and customers.

This overall shift in approach got the attention of investors, who prefer a multi-product platform play to a single product, said Jake Roberge, an analyst at William Blair. “Over the last three or four years, they’ve started to gain a lot of traction with document understanding, process mining, task mining and test suite so they now have four or five products that have gained real traction and real customer testimonials. And investors always reward that,” he said.

5 investors discuss the future of RPA after UiPath’s IPO

The proof is in the stock price

UiPath priced its IPO at $56 per share in mid-2021, earning it a valuation near to its pre-IPO price. But as its final private-market investors paid $62.28 per share for its equity before it went public, it had ground to make up. Thankfully for those backers, the company’s stock price shot higher, quickly rising to around $80 that year.

Then a long, slow and painful decline came into effect. By late 2022 UiPath was worth just over $10 per share, making it a poster-child for the comedown of post-2021 enthusiasm.

Those lows did not last too long, with UiPath’s stock recovering to more than $18 per share in 2023 before it reported its third-quarter results. Those figures were well-received by Wall Street, immediately bolstering the value of UiPath to $25 per share, where it has largely stayed since. Summing, the company has lost value from its IPO price and all-time highs, but has clawed its way back from its lows all the same.

How much of the company’s valuation recovery can we tie to its updated strategy and AI products? Enslin joined in April of 2022, before the company’s share price bottomed out later that year. 2022 was also the year in which growth rates at UiPath reached their nadir.

The company’s fiscal 2022 covers from January 31, 2021, through January 31, 2022. Its fiscal 2023 then covers all of calendar 2022, and its fiscal 2024 brings us to its most recent earnings report, which covers the three months concluding October 31, 2023.

Here are UiPath’s historical quarterly growth rates, and the pace of its ARR expansion from the same time periods. To make the data simpler, we’ve added calendar years to the fiscal rundown:

[~Calendar 2021]

Fiscal Q1 2022 revenue growth rate: 65% (ARR growth: 64%)Fiscal Q2 2022 revenue growth rate: 40% (ARR growth: 60%)Fiscal Q3 2022 revenue growth rate: 50% (ARR growth: 58%)Fiscal Q4 2022 revenue growth rate: 39% (ARR growth 59%)

[~ Calendar 2022]

Fiscal Q1 2023 revenue growth rate: 32% (ARR growth: 50%)Fiscal Q2 2023 revenue growth rate: 24% (ARR growth: 44%)Fiscal Q3 2023 revenue growth rate: 19% (ARR growth: 36%)Fiscal Q4 2023 revenue growth rate: 7% (ARR growth: 30%)

[~Calendar 2023]

Fiscal Q1 2024 revenue growth: 18% (ARR growth: 28%)Fiscal Q2 2024 revenue growth: 19% (ARR growth: 25%)Fiscal Q3 2024 revenue growth: 24% (ARR growth: 24%)

Enslin joined during the first quarter of UiPath’s fiscal 2023. The company’s growth rates had already slowed to the point that they were down 50% from the year-ago period (from 65% to 32%), a percentage that would rise to a roughly 82% decline in growth (from 39% to 7%) in the final quarter of UiPath’s fiscal 2023.

That’s the bad news. The good news is that since the start of UiPath’s fiscal 2024 — the three months ending April 30, 2023 — its growth rates have not only bounced back to double-digits, but have posted consecutive quarters of accelerating growth.

Can UiPath keep accelerating? When the company details the final quarter of its fiscal 2024 on March 13, we’ll get more data, but UiPath guided for 23.5% to 25.1% revenue growth and ARR growth of 20.4% to 20.9% in its quarter ending January 31, 2024. While we might anticipate another quarter’s revenue growth acceleration, it doesn’t appear that the company expects that its ARR will expand from the 24% it posted in its most recently reported quarter.

The arrival of Enslin did not instantly bolster UiPath’s growth rate, but after a few quarters it did turn the corner and embark on a path of faster revenue growth. That’s as clear an endorsement of a new strategy as we can infer from public numbers and a company’s internal actions, which are always occluded from our sight.

How much of its recent growth gains were born from operational shifts and what portion is attributable to newer AI-based revenues is not clear, but one signal that we did note in its third quarter fiscal 2024 data (the three months ending October 31, 2023) is that its net retention was 121%. That’s far and above what we have seen recently from many software companies. And it’s largely flat from its year-ago results, which, given how the tech market has evolved from October 2022 to October 2023, frankly feels impressive.

Business results are rarely single-factorial, so from where we sit, both an updated strategy and having an AI-ready company have helped UiPath recover its swagger. Now the question for the company is how much — if any — acceleration is left in its tanks. Even if the answer is zero, UiPath with ARR about to reach $1.5 billion and growth rates of around 25% is hardly a bad place to wind up. Hell, back in 2021 that would have been what, $100 billion?

UiPath co-CEO Rob Enslin still sees plenty of potential despite stock turbulence