Publicly listed electric vertical take-off and landing jet developer Lilium has announced plans to raise $250 million. According to an SEC filing, historic backer Tencent pre-funded the purchase of $100 million in shares, as well as committed to pre-fund the purchase of an additional $75 million in shares, contingent upon Lilium being able to secure a matching $75 million via "equity, debt or grants from certain third parties".
Should the deal complete, Lilium’s post-IPO equity raise would total $819 million, and bring the company’s total funding raised to just shy of $1.2 billion
Born in a time of relative prosperity, today’s market conditions aren’t boding so well for Lilium. Back in March of 2021, the company went the SPAC route and listed on Nasdaq at a $3.3 billion valuation. Fast forward to November of last year, and the company was selling shares, $119 million worth to be exact, that were to be used for “general corporate purposes, which may include payment of Lilium’s suppliers and working capital uses.”
No one will argue that hardware is hard and there’s a tremendous amount of capital that needs to be poured into a project like Lilium’s before any discernible ROI makes itself known. However, with concerns over cash burn rate, a seemingly narrowing liquidity runway, and a stock price that’s dropped nearly 86% year-over-year, it’s a tricky situation for both Lilium and its existing investors.
Adding to Lilium's headaches, the company's stock price dipped below Nasdaq's $1 share price threshold as of 1 March of this year and has remained south since. Standard operating procedure for Nasdaq is to issue a warning notice after 30 days of trading below the $1 threshold, and an additional 180 days of advance notice are provided before delisting.
If Lilium is quoting $250 million to keep the lights on, Tencent’s reaction and position is pretty clear, particularly considering the caveat. We’ll back you with $100 million, but only provide another $75 million if you can find a matching backer - we’re not going all in on this all alone.
According to a statement issued by Lilium, the $250 million will see the company through to achieving its first manned flight. This flight is a crucial milestone for the company, as it then unlocks around $250 million in pre-delivery payments.
“The capital raise announced today marks an important development in our ongoing mission to revolutionise the aviation industry. With this financing, we are excited to continue our development program at full pace,” commented Lilium CEO Klaus Roewe. “We remain in multiple constructive discussions with existing and potential new investors. We hope to announce further updates soon.”