RealWear, a Vancouver, Wash.-based company that sells industrial hands-free wearable “assisted reality” headsets, is going public via a SPAC deal with Seattle-based Cascadia Capital.
The deal, announced Monday, will value the new combined company at $375.5 million.
RealWear sells ruggedized head-mounted voice-controlled devices that project a virtual Android tablet just below line of sight. Industrial workers use the product to do remote video calling, document navigation, guided workflow, mobile forms, and data visualization, among other tasks. The company recently launched an accompanying RealWear Cloud Platform to manage devices and data.
The concept of an augmented reality heads-up display hasn’t yet reached mainstream consumers but RealWear carved a niche with more than 5,000 enterprise customers such as Siemens, Johnson & Johnson, Ford, and others. It counts 41 of the Fortune 100 as clients and has deployed more than 70,000 units.
The company reported $20.5 million in 2022 revenue, up from $13.9 million in 2019, according to an investor presentation made public Monday. Its gross margin was 63% in 2022.
The deal, expected to close in the second half of 2023, combines RealWear with Cascadia Acquisition Corp., a special purpose acquisition company led by Seattle investment bank Cascadia Capital.
Cascadia previously said it was targeting a company in the robotics and AI space, and had set a February 2023 deadline to get a deal done.
Also known as blank check companies, SPACs re-emerged in a big way during the pandemic as capital flowed to newly formed entities and entrepreneurs used the financial instruments to more quickly enter the public markets.
But the performance of post-merger SPACs steadily dropped throughout 2022 amid the larger market slowdown and several deals were spiked.
There were just 86 SPAC IPOs in 2022, compared to 613 in 2021, according to SPACInsider. The median post-merger company that debuted in 2022 lost 70% of its value, Bloomberg reported.
Five Seattle-area companies went public via SPAC since 2021 — Porch, Nautilus Biotechnology, Rover, Getty Images, and Leafly — and their shares have fallen sharply.
Only two companies have gone public so far in 2023 via a SPAC.
Cascadia’s Jamie Boyd, who led the firm’s SPAC as CEO, expressed optimism back in May that a deal would get done. “We are absolutely believers in this,” Boyd told Startup in Pittsburgh, where Cascadia hosted a robotics and AI conference.
Cascadia’s SPAC ambitions are unique in that the firm has traditionally helped healthcare, retail, technology and other companies find buyers. Last year Cascadia raised more than $50 million in a unique deal to expand its services.
Founded in 2016, RealWear has raised more than $120 million to date, including a $23.5 million Series C round in June from Foundry Group, Qualcomm Ventures, Kopin, and Columbia Ventures Corporation. It raised a $80 million Series B round in July 2019. Other backers include Bose, Teradyne, Kopin Corporation, and JP Morgan Chase.
RealWear is led by chairman and CEO Andrew Chrostowski, former president of Scott Safety who held exec roles at UTC Aerospace Systems, Goodrich, Energizer, Pfizer, and Hitachi.
In addition to Boyd and Cascadia Chairman Michael Butler, directors of Cascadia Acquisition Corp. include Edgar Lee, a former executive at Oaktree Capital Management; Scott Prince, CEO of APS Logistics Holdco; and Arun Venkatadri, a senior product manager at Aurora who previously worked at Uber and Lyft and founded Extremis Ventures.
“CCAI was established with the intention of identifying and partnering with businesses that are utilizing technology and innovation to disrupt industry in sizable and expanding markets,” Boyd said in a statement Monday. “RealWear perfectly fits these criteria, and we are thrilled to partner with them and add value by strengthening their financial position in pursuit of growth initiatives across product, customer, geography and industry initiatives.”