Chinese unicorns go public in the US, will they rush to go public despite the headwinds?

Fundraising shrunk by 800 million yuan, the "speed of life and death" in the intelligent driving circle

Recently, there has been another big news in the field of intelligent driving: another heavyweight player is about to enter the capital market.

On June 17, the China Securities Regulatory Commission disclosed the registration notice for overseas issuance and listing of Momenta Global Limited.

This means that Momenta, the "top student" that has set the industry benchmark in 6 years, has officially obtained the "admission ticket" to the U.S. stock market and sounded the clarion call for the sprint.

According to the announcement, Momenta plans to issue no more than 63,352,856 common shares and plans to list on the Nasdaq or New York Stock Exchange in the United States. This also verifies the previous foreign media rumors that Momenta secretly launched an IPO in the US stock market and is expected to raise US$200-300 million.

However, this is not the first time that Momenta has been rumored to go public. As early as 2020, the media broke the news that it was considering listing in the United States or Hong Kong. At that time, Momenta, which was in the limelight, targeted a fundraising amount of up to US$1 billion.

Four years have passed, and while Momenta has delivered impressive results to the market, its target fundraising has shrunk by nearly 800 million yuan, reflecting the severe challenges faced by the entire autonomous driving industry and making people sigh that "the blooming period is too short."

However, in the capital winter caused by the economic downturn, a number of smart driving companies have gone against the wind and rushed to go public. A closer look reveals that each of them is bleeding and fighting to break through, which is quite lively.

Tsinghua University top student starts a business

Momenta was founded in 2016. Like many smart driving startups, it has a "legendary" founder and a group of technical experts behind it.

The company's founder and CEO, Cao Xudong, graduated from the famous "Four-Character Class" of Tsinghua University.

Lou Tiancheng, known as "Master Lou", is currently the co-founder and CTO of Pony.ai, which is also going public in the United States; He Tao, co-founder of Xpeng Motors and then the lifetime honorary consultant of Xpeng Motors; Li Yifan, co-founder and CEO of Hesai Technology, the "first laser radar stock"; Zhang Tianlei, CEO of Mainline Technology, which focuses on L4 driverless trucks...all are autonomous driving experts of the same class.

Cao Xudong himself is also a young genius.

He studied engineering mechanics as an undergraduate and successfully obtained a direct doctoral opportunity at Tsinghua University. However, during his doctoral studies, he developed a strong interest in artificial intelligence and resolutely dropped out of school, even in the face of his tutor's repeated attempts to retain him and the temptation of sharing a room with him.

After that, he worked at Microsoft Research Asia and SenseTime, and finally decided to leave to start his own business and founded Momenta.

Because of this, most of Momenta's founding team came from Tsinghua University, Microsoft Research Asia, and SenseTime, places where Cao Xudong himself had been involved.

Such a strong technical configuration also enables the company to have outstanding technical advantages in autonomous driving core algorithms, high-precision maps, environmental perception, etc. Moreover, this technical advantage is not only reflected in academic achievements, but more importantly, it can be quickly transformed into products and solutions.

Unlike other autonomous driving companies, Momenta has adopted a "two-legged" strategy since its inception, that is, developing both the L2-level mass-produced intelligent driving system (Mpilot) and the L4-level fully autonomous driving system (MSD).

Cao Xudong calls this key strategy the "one flywheel, two legs" model. The flywheel refers to the data-driven AI flywheel, and the two legs refer to obtaining a large amount of actual road data through mass-produced vehicles, which feeds back into the research and development of L4 technology to form a virtuous circle.

This strategy is undoubtedly much more practical than focusing on L4, and has more landing value and the possibility of large-scale replication. This has also won it the favor of many investors.

Looking back at Momenta's financing history, it is truly star-studded.

In the investment world, there are usually factions, such as the Alibaba faction, the Tencent faction... which are clearly distinguished.

Behind Momenta stand a number of bigwigs, including Kai-Fu Lee's Innovation Works, Lei Jun's Shunwei Capital, Li Bin's NIO Capital, Baidu's Wang Xiao's 9He Ventures, Tencent Capital, IDG Capital, Temasek and other top investment institutions, all of which have participated in the investment.

There are also many "national teams" such as China Merchants Venture Capital, Gundam Capital, China Construction Bank International, and Oriza Holdings that are betting favorably on the company.

So far, Momenta has completed seven rounds of financing, with a total disclosed financing amount of over US$1.26 billion (about RMB 9.15 billion). Moreover, after the C+ round of financing of over US$500 million in November 2021, Momenta's valuation reached US$3 billion (about RMB 21.7 billion), and it may be even higher now.

In addition, it is worth noting that Momenta has also won over many automobile manufacturers. Daimler, Bosch, SAIC, Toyota, General Motors, and Mercedes-Benz are all shareholders of the company and have established deep cooperative relationships with them. This is also an important factor in its becoming a leading player in mass production.

Recently, Momenta announced that it will cooperate with Huawei to jointly supply Toyota vehicles, which shows that Momenta is indeed not short of orders.

Judging from the investment situation, Momenta, which has recently invested in Zhiji and Zero One Auto, seems to be not short of money while making money from mass production of cars and placing bets online. So why is it rushing to go public at this time?

Behind the IPO Wave

Since the end of last year, there has been a wave of IPOs in the field of intelligent driving. In addition to the successful listings of Hesai Technology, RoboSense and Zhixing Technology, there are also companies such as Horizon Robotics, Black Sesame, Zongmu Technology, Pony.ai, WeRide, UDrive Innovation, and Tudatong waiting in line for listing...

The reason for going public cannot escape the word "money".

As we all know, autonomous driving is an extremely money-burning industry. Even with revenue growing year by year, it is difficult to recover investment costs.

Black Sesame Intelligence, which is listed in Hong Kong, has suffered a cumulative loss of nearly 10 billion yuan in the past three years, and Horizon Robotics has also suffered a loss of 17.5 billion yuan in three years. The huge investment in research and development and the inability to achieve profitability are common problems in the current industry.

And after the crazy pursuit in the past few years, the capital market's enthusiasm for the field of autonomous driving has clearly cooled.

According to statistics, there were only 67 domestic autonomous driving-related financing events in 2023, 59 fewer than in 2021, and the financing scale decreased by 80% year-on-year.

With financing becoming difficult in the primary market, IPO has become an option many companies have to choose.

So Momenta is not short of money?

There is definitely still a shortage. It has been more than two years since the company's last round of financing. After so many years of R&D, production, and scale-up, the money raised has basically been burned out.

Although Momenta's road to mass production is relatively smooth and its revenue may be much better, whether it will suffer losses and how much it will lose will depend on the financial reports disclosed after the subsequent listing.

In the current market environment, the autonomous driving industry is experiencing a brutal round of survival of the fittest, and the Matthew effect is becoming increasingly prominent. Some leading companies have gained survival space through IPOs, while a large number of mid- and low-end companies are facing the risk of being eliminated by the market.

The early flourishing technology routes are gradually converging. Advanced driver assistance systems represented by L2++ have become the current mainstream direction, and many L4 manufacturers have "come down to earth" to eat L2 meals, which means that the industry is shifting from pursuing long-term goals to solving immediate problems.

The IPO process of companies such as Momenta marks a new stage in the development of China's autonomous driving industry, which is full of opportunities as well as challenges.

At a time when capital enthusiasm is waning, technological bottlenecks are yet to be broken, and business models are yet to be established, autonomous driving companies need to view industry prospects more rationally and promote technological innovation and commercial implementation more pragmatically.

Autonomous driving technology is not a sprint, but a marathon.

The IPO of "Momenta" is not the end, but a new starting point. Let us wait and see who can stand out in this intelligent driving revolution and lead the industry to a brighter future.