ARK Venture Commentary

Monday, Nov 14th 2022

Commentary

The IPO Window Cracks Open for Autonomous Tech

Intel raised nearly $900 million by publicly listing Mobileye, its autonomous driving subsidiary, which traded up to a value of $23 billion.[1] That the newly relisted, vision-based driving assistance technology company could command a 14x sales multiple is perhaps a positive sign for markets given the relative paucity of IPO activity this year to date.[2]

Though the market reception was positive, it’s dangerous to judge a company by its first few weeks given the salesmanship that surrounds a listing. We believe it is probable investors like that the business is generating substantial cashflow and so not subject to financing risk. From our perspective, however, it’s unclear that Mobileye’s technology will be able bridge the gap between driver assistance and true autonomy.

And a Large Autonomous Tech Startup Shuts Its Doors

Argo.AI, a robotaxi startup funded by $2.6 billion from Ford and Volkswagen, announced its dissolution. The company, which employed 2,000, had launched commercial pilots in Miami and Austin earlier this year though uptake and capacity were unclear.[3]

Like many robotaxi initiatives, Argo relied on a high-definition-mapping, LIDAR-based approach to solving autonomy.[4] Solutions that rely upon high-definition mapping seem to excel in demonstrations but become brittle when confronted with a mutable urban driving terrain. We believe a dead end was perhaps the inevitable result of pairing a strategically challenged technical approach with a pair of legacy auto shareholders.

Will Mark’s Big Metaverse Bet Catalyze an End to Founder Deference?

Meta reported a 46% year over year drop in operating income as a deteriorating revenue line was coupled with accelerating metaverse-related spending.[5] Investors were not pleased, knocking more than 25% off its market cap over the course of a week. Since Mark Zuckerberg’s founder shares retain majority voting control, shareholders have no governance mechanism by which to meaningfully impact corporate strategy; given the indecorous financial results some are questioning the wisdom of the dual class structure.[6]

Though we disagree with Zuckerberg’s use of funds—specifically regarding his metaverse strategy—we believe corporate structures that allow technology CEOs to aggressively pursue asymmetric opportunities are good for investors and good for the world. In a rapidly changing technological world, companies need to be able to make bold bets, and public equity price signals provide sufficient near-term performance pressure in and of themselves.


Titan Global Capital Management USA LLC ("Titan") is an SEC registered investment adviser. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is a registered broker-dealer and member of FINRA/SIPC. ARK Venture Fund (“Fund”) is a Registered Investment Company product offered by ARK Investment Management LLC (“ARK Invest”), wherein TGT serves as introducing broker-dealer. The prospectus has been prepared exclusively by the Fund provider, and not by Titan or TGT, and thus Titan and TGT cannot guarantee the accuracy or completeness of the material. When you invest in the ARK Venture Fund, TGT receives transaction-based compensation from the third-party fund. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Titan and TGT are not registered. Fund holdings and related information are for illustrative purposes only and are not to be considered investment recommendations. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and clients may lose money, including their original investment and principal. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person.


[1] https://www.yahoo.com/news/mobileye-rises-33-debut-raising-155432635.html

[2] In North America, funds raised are down 94% through the first 9 months of 2022: https://www.ey.com/en_gl/ipo/trends

[3] https://techcrunch.com/2022/10/26/ford-vw-backed-argo-ai-is-shutting-down/

[4] https://www.argo.ai/products/

[5] https://investor.fb.com/investor-news/press-release-details/2022/Meta-Reports-Third-Quarter-2022-Results/default.aspx

[6] https://www.reuters.com/breakingviews/zuckerberg-motivates-supervoting-stock-resistance-2022-10-27/

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