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Serve Robotics, the Uber and Nvidia-backed sidewalk robot delivery company, debuted publicly on the New York stock exchange Thursday, making it the latest startup to choose going public via a reverse merger<\/a> as an alternative path to capital needed to fund growth.<\/p>\n The company, which spun out<\/a> of Uber\u2019s acquisition of Postmates in 2021, hits the Nasdaq under the ticker \u201cSERV\u201d with gross proceeds of roughly $40 million \u2014 \u201cprior to deducting underwriting discounts and offering expenses,\u201d per regulatory filings \u2014 at a share price of $4.<\/p>\n Serve completed its reverse merger with blank-check company Patricia Acquisition Corp. in August 2023, and at the same time secured $30 million in a round led by existing investors Uber, Nvidia and Wavemaker Partners, bringing its total amount raised at the time to $56 million. While Serve\u2019s debut in the public markets comes from a reverse merger and not a SPAC, the two alternate paths to IPO are not too dissimilar. They both provide startups with a faster route to public markets. However, pulling this particular financial lever has its risks, especially if the company is pre-revenue or bringing in very little revenue. We need look no further than the countless fallen autonomous vehicle and electric vehicle companies<\/a> to determine that this is not a golden ticket to longevity or profitability.<\/p>\n Like any publicly traded company, this path does require financial disclosures that provides information on revenue and profits or losses.<\/p>\n Serve brought in $207,545 in revenue last year, up from $107,819 in 2022, per regulatory filings<\/a>. That\u2019s at a loss of $1.5 million in 2023 and $1.04 million in 2022. However, Serve Robotics said it\u2019s expecting enormous growth fueled by money generated by going public. Those funds will go toward funding R&D for future generations of robots, manufacturing activities, geographic expansion and general working capital and corporate purposes.<\/p>\n The startup also has some big revenue ambitions. Serve said it aims to generate between $60 million and $80 million in annual revenue, with contribution margins of over 50% and positive cash flow by the end of 2025. The company pointed to recent momentum, including its 25% month-over-month increase in deliveries since 2022 when the startup started delivering for Uber Eats.<\/p>\n Future growth will come from scaling the 100 robots deployed today in Los Angeles to up to 2,000 robots in multiple U.S. cities by the end of next year through a contract with Uber Eats<\/a>. Serve has also enlisted Magna International as a manufacturing partner. Currently, Serve handles 300 restaurants via the Uber Eats and 7-Eleven platform in LA, but has its eyes on Dallas, San Diego and Vancouver, Canada, according to CEO Ali Kashani.<\/p>\n Serve projects that a big portion of its revenue will come from ads, Kashani told TechCrunch.<\/p>\n \u201cI never thought that I would start a robotics company and then be in the ads business,\u201d said a tired, but excited, Kashani in a phone interview minutes before the bell rang. It\u2019s normal for companies to barely sleep before making their public debut out of a need to finalize all the financials and pure adrenaline. \u201cBut it\u2019s great because this can help offset the delivery costs, so everybody wins.\u201d<\/p>\n Kashani said Serve has had a lot of inbound interest for ads on its cute little sidewalk robots. On an annual basis, ad revenue can generate 25% to 50% of Serve\u2019s total revenue, he said.<\/p>\n That\u2019s one of the value propositions Serve has pitched to investors. Serve also says it can tap the rapid progress in AI and robotics to help reduce reliance on cars, because who needs something as small as a burrito delivered in a sedan anyway?<\/p>\n \u201cThe tailwind here is that these robots are a lot more scalable than a lot of the alternative approaches we have,\u201d said Kashani. \u201cIf you look at a car, it has about 3,000 times more kinetic energy than one of our robots, so just by nature, these are safer\u2026 for pedestrians, bikers for everybody else, and I think that\u2019s definitely recognized when we talk to cities. So there\u2019s a lot of regulatory momentum, but you also have the fact that there is a shortage of labor. You can see companies in the delivery space are still not necessarily profitable, and they\u2019re looking for ways to bring some mix of automation into their fleets. So we see a lot of interest in the solution that we\u2019re providing.\u201d<\/span><\/p>\n Serve\u2019s robots operate at Level 4 autonomy<\/a>, meaning they can operate autonomously<\/a> within certain boundaries and conditions. However, Serve still relies on remote human operators to supervise operations in certain scenarios, like at intersections or if something unexpected happens.<\/p>\n The company\u2019s offering is expected to close around April 22. Serve\u2019s gross proceeds from the offering could hit about $46 million, according to Kashani, if Aegis Capital Corp., the deal\u2019s underwriter, takes the company up on its 45-day option to buy up to 150,000 additional shares of common stock, or about 15% of the number of shares sold, to cover any over-allotments.<\/p>\n Upon the closing of the merger, Uber held a 16.6% stake and Nvidia a 14.3% stake in Serve, according to regulatory filings<\/a>. An April filing shows that stake will change to 11.5% and 10.1%, respectively, once the offering closes, but a Serve spokesperson caveated that those percentages may change given the $4 opening share price.<\/p>\n Sarfraz Maredia, Uber\u2019s vice president of delivery and head of its Americas region, has joined Serve\u2019s board.<\/p>\n<\/div>\n Serve Robotics started its life as Postmates X, the robotics division of on-demand delivery company Postmates. The autonomous sidewalk robots started delivering to Postmates customers in multiple Los Angeles neighborhoods in 2018. It started a commercial service in 2020.<\/p>\n Uber\u00a0acquired Postmates<\/a>\u00a0in late 2020 for $2.65 billion. Three months later, Postmates X\u00a0spun out as an independent company<\/a>\u00a0called Serve Robotics. The new name was taken from the autonomous sidewalk delivery bot that was developed and piloted by Postmates.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div><\/div>\n