Quanergy Systems

Quanergy Systems Inc. was a lidar sensor company founded in 2012 that developed solid-state lidar technology for autonomous vehicles and other applications.²⁹¹³ The company raised $160 million at a peak valuation of more than $1.5 billion and went public via a SPAC merger in February 2022.²⁵⁹¹¹ Quanergy filed for Chapter 11 bankruptcy on December 13, 2022, and its assets were sold in February 2023 to a group of investors including former board member Tamer Hassanein.^1161718

Timeline

Money raised

Quanergy raised $160 million to date at a peak valuation of more than $1.5 billion.²⁹ In December 2013, Quanergy raised an $800K seed round from Rockpool Capital.¹⁰ In May 2014, Quanergy raised a $5M seed round led by Motus Ventures with participation from Samsung Ventures, Wardenclyffe Partners, Newbury Ventures, and TSVC.¹⁰ In December 2014, Quanergy raised a $40M Series A round led by Rising Tide with participation from Daimler Trucks North America, Samsung Ventures, Wardenclyffe Partners, Aptiv, Wicklow Capital, and Motus Ventures.¹⁰ In July 2015, Quanergy raised a $10M Series A-plus round from Delphi Automotive.¹¹ In August 2016, Quanergy raised a $90M Series B round at a valuation of $1.6 billion from Sensata Technologies, Delphi Automotive, Samsung Ventures, Motus Ventures, and GP Capital.¹⁰¹³¹⁵ In October 2018, Quanergy raised a $23.65M Series C round at a valuation of $2.43 billion from investors including Alisher Usmanov, Daimler, G Squared, Hof Capital, Microventures, and Tower Equity.¹¹ In November 2018, Quanergy secured $20M in equity funding and $25.5M in convertible note financing.¹²

Investors named in the sources: Samsung Ventures^2101213, Motus Ventures¹⁰¹²¹³, Rockpool Capital¹⁰, Wardenclyffe Partners¹⁰¹², Aptiv¹⁰, Sensata Technologies¹⁰¹²¹³, GP Capital¹⁰¹³, Daimler Trucks North America¹⁰, Wicklow Capital¹⁰¹², Newbury Ventures¹⁰¹², TSVC¹⁰, Rising Tide¹⁰¹², Reshape Ventures¹⁰, Delphi Automotive¹¹¹²¹³, Alisher Usmanov¹¹, Daimler¹¹¹², G Squared¹¹, Hof Capital¹¹, Microventures¹¹, Tower Equity¹¹, Geely¹².

What happened

Quanergy Systems Inc. was founded in 2012 by Louay Eldada, Angus Pacala, and Tianyue Yu.¹¹ The company developed lidar sensors that bounce lasers off objects to help autonomous cars know what's nearby.²⁹ In September 2014, Quanergy announced a partnership with Mercedes-Benz to put its devices on cars testing autonomous driving features.²⁹ In January 2015, Quanergy and Mercedes-Benz showed off a Mercedes E350 sedan outfitted with Quanergy's lidar devices at CES.²⁹ Quanergy promised to shrink existing lidar hardware through science and sell it at a fraction of the price.²⁹

Quanergy led the pack as investors poured money into companies describing new techniques for lidar devices.²⁹ Quanergy raised $160 million to date at a peak valuation of more than $1.5 billion.²⁹ In 2016, Quanergy announced it had developed a lidar that cost $250 or less, which shot the company to unicorn status.⁵ Quanergy introduced the S3 solid-state lidar product at CES in 2016.⁹¹³ Quanergy struggled to deliver products along the timelines it set for itself and shipped devices that did not work as well as advertised.²⁹

Numerous employees left over the 18 months prior to August 2018, including several at key positions.²⁹ Quanergy's autonomous car business did not develop the way it thought it would.²⁹ In July 2018, Daimler AG announced a test program for autonomous vehicles in the Bay Area that did not include Quanergy, using Velodyne for lidar.²⁹ Quanergy increasingly focused on other applications for lidar, including a plan to help build a digital border wall along the Mexican border.²⁹ Quanergy stopped talking about an IPO and pursued new investments, and had talks about finding a buyer, according to people with knowledge of the situation.²⁹

Quanergy backers Samsung Ventures and Sensata Technologies expressed disillusionment with the startup, according to people familiar with those firms.²⁹ In August 2018, CEO Louay Eldada invited Bloomberg News to visit his headquarters and assembly line, which he said was capable of shipping a million lidar devices a year.²⁹ Eldada admitted faults with earlier products that had since been corrected and insisted that automotive partners remained optimistic about Quanergy.²⁹ Eldada said Quanergy had more than 5,000 customers but could not name them for competitive reasons.²⁹ Former employees said execution was a consistent problem at Quanergy and described Eldada as a combustible and intimidating presence.²⁹

One former employee said he never saw a single device come off the line at Quanergy that met all of its stated specifications, an allegation the company denied.²⁹ In July 2018, Ryan Field, a senior employee in charge of chip development, left the company.²⁹ In January 2020, CEO and co-founder Louay Eldada stepped down; Kevin Kennedy took over as interim CEO and became permanent in April.⁵⁷ In June 2021, Quanergy agreed to merge with SPAC CITIC Capital Acquisition Corp. at an implied valuation of $1.4 billion.⁵¹² The SPAC deal was expected to inject around $278 million in pro forma net cash, including $40 million in PIPE funding.⁵

On February 8, 2022, Quanergy completed its SPAC merger and began trading on the NYSE under ticker QNGY.⁴¹¹ In November 2022, Quanergy's stock plunged 70% in two days amid a cash crunch, a new stock offering, layoffs, and a de-listing threat.³ On December 13, 2022, Quanergy Systems Inc. filed for Chapter 11 bankruptcy in the District of Delaware.¹¹⁶¹⁸ The company reported $40.4 million in assets and $28.9 million in liabilities.¹⁸ After an unsuccessful prepetition marketing process, the company sought to run a Chapter 11 sale process funded with $9 million of cash on hand.¹⁸

A group of investors including former board member Tamer Hassanein emerged as the winning bidder for Quanergy's assets in an auction.¹⁷ The sale was confirmed by the Bankruptcy Court on February 23, 2023.¹⁷ The acquiring company also acquired the Quanergy name brand and remained a provider of LiDAR sensors and smart 3D solutions.¹⁷ Quanergy renewed focus on physical security, smart spaces, and industrial automation markets.¹⁷

Legal outcomes

• filedQuanergy Systems Inc. filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code on December 13, 2022.¹¹⁶¹⁸
• filedThe bankruptcy case was administered under Case No. 22-11305 in the United States Bankruptcy Court for the District of Delaware.¹⁶
• filedThe company sought to run a Chapter 11 sale process after an unsuccessful prepetition marketing process.¹⁸
• settledA group of investors including former board member Tamer Hassanein was confirmed as the winning bidder for Quanergy's assets in an auction administered by the Bankruptcy Court.¹⁷

Where the founders are now

Louay Eldada stepped down as CEO in January 2020.⁵⁷ Kevin Kennedy took over as interim CEO and became permanent in April 2020.⁵ Enzo Signore was CEO of Quanergy at the time of the Chapter 11 sale in February 2023.¹⁷

Lessons, as others put them

"The hype is falling. ...The closer you get to implementation, the clearer it is how difficult it will be to commercialize."Mike Ramsey, transportation and mobility analyst at Gartner²⁹

Sources

1. Sensor Startup Quanergy Files for Bankruptcy 10 Months ..., wsj.com, Dec 13, 20
2. How a Billion-Dollar Autonomous Vehicle Startup Lost Its Way, IndustryWeek, Aug 15th 2
3. Quanergy Systems' stock dives 70% amid cash crunch ..., bizjournals.com, Nov 1, 202
4. S-8, sec.gov, Aug 29, 20
5. Lidar company Quanergy to go public via $1.4B SPAC deal | TechCrunch, TechCrunch, 2021-06-22
7. Quanergy CEO Leaves After Driverless Tech Unicorn ..., finance.yahoo.com, Jan 16, 20
9. Autonomous Cars: How a billion-dollar autonomous vehicle startup lost its way - The Times of India, The Times of India, Aug 13, 20
10. Quanergy Systems Valuation, Funding & Investors | Multiples, multiples.vc, Sep 18, 20
11. Quanergy IPO Timeline and Financing Details - Forge, forgeglobal.com
12. Quanergy constructs $1.4bn reverse merger - Global Venturing, Global Venturing, 2021-06-23
13. Quanergy Raises $90 Million in Series B Funding, sUAS News, 2016-08-22
15. Quanergy Raises $90M, Brings Valuation to $1.59B for Self ..., wsj.com, Aug 22, 20
16. Quanergy Systems, Inc., cases.stretto.com
17. Quanergy Successfully Completes Chapter 11 Sale, prnewswire.com, 2023-02-23
18. New Chapter 11 Filing - Quanergy Systems Inc., Cole Schotz, 2022-12-14

How this case file was put together

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