Stanford spinout QuantumScape is set to merge with NYSE-listed Kensington Capital Acquisition in a $700m deal that will value the combined company at $3.3bn.

QuantumScape, a US-based solid-state battery developer spun out of Stanford University, agreed to a reverse merger with special purpose acquisition company Kensington Capital Acquisition Corp yesterday to list on the New York Stock Exchange (NYSE). The deal will net QuantumScape more than $700m in proceeds, including a $500m private investment in public equity deal anchored by Fidelity Management and Research and Janus Henderson Investors. The combined business will trade on the NYSE under the ticker symbol QS and is expected to be valued at $3.3bn. The merger is set to conclude in the fourth quarter of 2020, subject to clearing customary closing conditions. Founded in 2010, QuantumScape is working on solid-state lithium-metal batteries for electric vehicles. Batteries create an electric circuit by moving a charge from the positive terminal – the cathode – to the negative end – the anode – through the electrolyte. The latter is typically a liquid or gel, such as in lithium-ion batteries, but solid-state batteries use a solid material instead. Solid-state batteries potentially offer higher energy density while being safer, but have thus far faced a range of challenges, including cost and durability. QuantumScape will use the proceeds from the reverse merger, together with its series F round, to drive continued product development and validation through to the production launch of its batteries for use in cars by automotive manufacturer Volkswagen (VW). Justin Mirro, chairman and chief executive of Kensington, will join the combined company board of directors. QuantumScape said proceeds from the merger and its series F round would amount to more than $1bn, but it has not disclosed all series F details. VW committed up to $200m in June this year and sovereign wealth fund Qatar Investment Authority was identified as a co-leading investor in the merger announcement. VW and QuantumScape previously formed a joint venture to mass-produce the spinout’s batteries and their initial collaboration dates back to 2012. The carmarker made a first $100m investment in QuantumScape in mid-2018. QuantumScape has not disclosed details about its earlier funding but lists Stanford University, automotive parts manufacturer Continental, carmaker SAIC Motor, Khosla Ventures, Kleiner Perkins, Lightspeed Venture Partners, Capricorn Investment Group, Breakthrough Energy Ventures and private investor Bill Gates as shareholders on its website.

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Thierry Heles

Thierry Heles is the editor of Global University Venturing, host of the Beyond the Breakthrough interview podcast and responsible for the monthly GUV Gazette (sign up here for free).