@happyinmotion and
@Theo neither of you are wrong, but we didn't have much optionality at the time. Of course we wanted to be a stronger position, but prior to the SPAC bubble, it was nearly impossible for Alta to raise money - we put the Redshift into initial production on $25m total into the company including pioneering our new battery architecture - now industry standard. Rarely were able to operate with more than 6 months of runway (over a 9 year period!). So when H-D approached us with the first part of the deal, non-dilutive capital that we convinced them to put towards plans we already had, no responsible executive team or board would have turned that down. And I have every reason to believe it was a good faith deal.
As for the acquisition offer, yes, there is good reason to believe it was in bad faith from the start - you'd have to ask H-D employees, but there are a number that are no longer there that likely know the truth. I would have preferred we turn it down and raise the Series C, but I was/am a pathological optimist
and given our context of perpetual underfunding and the threat of H-D pulling the partnership with the remaining almost $20m in non-dilutive funding if we did so, it was a very reasonable board decision to take the deal. And while it is somewhat common for an equity financing round to skip a no-shop, I have rarely seen an acquisition that did so outside of *highly* competitive sectors (which we were not). No one wants their offer used to go squeeze more money and the final deal out of a competitor. Famously, this is how Ferrari screwed Ford - lawyers have learned some lessons since the 60s.
Hindsight is 20/20. We now know if we had hung on for maybe 12 (certainly 18) months, we would have hit the SPAC bubble and could have raised $100Ms easily given our position and sales (by 2020 we expected over 10k unit sales per year, >$100M in revenues at positive margin). We now know how little H-D valued our brand and product line - we now know thanks to Stark how wrong they were to do so. But at the time, to deny our long-time tapped-out investors an exit, take a $20M hit, in order to roll the dice on another uncertain funding round, rather than take a solid deal from a company we knew needed us and had demonstrated a major commitment to electric (and was cornered by their own promises to the public markets)... I can't think of many boards that would have done differently than we did.
electricdirtriders.com
