Is Fisker Automotive the next Solyndra?
Update (April 5th, 2013): Fisker Automotive lays-off 160 employees
We should find out soonRumors of Fisker's impending bankruptcy are swirling around the net, comparing the company to infamous failed greentech startup Solyndra. Matthew Mosk's piece for ABC gives a good summary of the situation, even if it doesn't really confirm anything. At the center of it all is grapevine chatter about the firm hiring a prominent law firm to advise it on possible bankruptcy proceedings because they might not be able to make a sizeable repayment of principal on a loan due at the end of this month. It certainly wasn't a good sign (some would even say it was "bad karma", har har) when Fisker's founder and namesake, Henrik Fisker, left the company last month.
An additional risk is that rumors of bankruptcy can become self-fulfilling prophecies; companies that might have been able to raise money to meet their obligations can suddenly see investors and banks close their wallets as soon as there's a rumors of failure. But it also doesn't help that the company is only giving neutral answers to questions: "We are not offering any official comment on the speculation around bankruptcy at this stage," said Roger Ormisher, a spokesperson for the electric car company Fisker Automotive.
The company received a $528.7 million conditional loan in 2009, though they had to reach certain milestones to get the whole amount and they probably haven't drawn the whole thing.
Meanwhile, Tesla Motors, Fisker's main rival is announcing that it has exceeded 20,000 units in production rate, will have its first profitable quarter and intends to repay the Department of Energy's loan ahead of schedule and in half the required time.
I don't know if Fisker will go into bankruptcy or if they'll overcome their difficulties and go on to thrive. The omens certainly aren't good, but it remains that the world of startups and new technologies is littered with corpses, especially in hard industries like transportation. This doesn't mean that it's not worth investing in such companies, or that all the money that went into this endeavor has been wasted. It's just the nature of the animal that not all companies succeed (the whole venture capital model is that you invest in a portfolio of companies and hope that X% of them will succeed, and that their success will be big enough to more than compensate for the failure -- if you had to be sure of success before investing in early stage companies, you'd never invest anything and nothing would get off the ground).