Lidar makers Ouster and Velodyne agree to merge as the lidar industry consolidates

Ouster is one of the early promising startups we’ve been following since 2017. In December 2017, the robocar LiDAR startup made our list of the top 5 promising early-stage startups to watch. Then in December 2020, Ouster agreed to go public through a $1.9 billion merger with special purpose acquisition company (SPAC) Colonnade Acquisition Corp. However, as the Lidar industry consolidate, Ouster decided to join forces with another lidar company to fend off competition.

Today, Ouster announced it has agreed to merge with Velodyne Lidar in an all-share merger as the two companies search for profitability in the crowded autonomous vehicle technology market. Before this announcement, the two lidar company compete in precision sensors that enable self-driving vehicles to see the world around them.

As part of the merger agreement, Ouster Chief Executive Angus Pacala will become CEO of the merged company while Velodyne chief Ted Tewksbury will become executive chairman. The deal will give the new company a combined market capitalization of about $400 million.

Pacala said a name for the new company will be announced later. “The outlook for lidar technology is incredibly bright,” Pacala added.

The San Francisco-based self-driving Ouster develops hardware and software for robotics and computer vision. Its OS1 sensor represents a step-change in LIDAR sensing technology that is available on the market today.

Since the beginning of this year, Ouster has lost 77% of its market value while Velodyne was down 80% this year before Monday’s merger announcement. “There need to be financially strong companies in this space,” Ouster Chief Executive Angus Pacala told Reuters on Monday. “Necessary consolidation is happening.”

Ouster said its digital lidar sensor technology as having practical applications beyond just self-driving vehicles and extends to areas such as drones, smart cities, and robotics.

Founded in 2016 by CEO Angus Pacala, co-founder and former head of engineering of Quanergy Systems, and CTO Mark Fricht, Ouster builds high-resolution lidar sensors for autonomous vehicles, robotics, and many other applications. Ouster has raised at least $142 million from private market investors, including Cox Automotive, Silicon Valley Bank, and Fontinalis Partners, which is co-owned by Ford Motor Executive Chairman Bill Ford.

Ouster and Velodyne are two of the dozens of lidar makers in a growing list of leading companies in the automated mobility sector including Affectiva, Argus Cyber Security, BestMile, CARMERA, Civil Maps, EdgeConneX, INRIX, Metamoto, NIRA Dynamics, Parsons, Perceptive Automata, Phantom.auto, Samsung, Silexica, Speak With Me, Stanford University, understand.ai, Velodyne LiDAR, and Verizon.