Rally’s co-founders didn't stick it out in Buffalo.
But their company will still make an impact here following a go-public deal with Americas Technology Acquisition Corp. ATA is a special purpose acquisition corporation, or SPAC, which have risen to prominence in recent years as alternatives to initial public offerings.
Under the deal, Rally and ATA will merge to become a public company on the New York Stock Exchange under the RLLY ticker, and continue to be led by Rally CEO Numaan Akram, according to an ATA news release. The deal is expected to close in the fourth quarter.
Terms are significant, placing a $208 million valuation on Rally. A total of $165 million will be issued to existing Rally stockholders when the deal closes.
One of those shareholders is Buffalo-based 43North, a state-funded business competition that brings startups to Western New York each year. Rally won a $500,000 award in the 2019 version of the competition, giving up 5% of its company to 43North in the process.
It’s not clear whether 43North retains that equity stake or how much specifically it will gain from the Rally deal. But it seems likely to be worth millions of dollars in stock.
Rally will still likely present to investment bankers in a road show before its offering, and will then enter a stock market that has been extremely stormy for the last few months, especially for tech companies. But holding the stock could lead to an even bigger payoff if public market investors buy into Rally’s business proposition and boost its share prices.
Rally’s “bus-sharing” business model allows bus riders and companies to create on-demand trips, and the company runs a marketplace that includes 3,000 small businesses that each own approximately 10 buses, according to the ATA news release.
Proceeds from 43North portfolio companies get funneled into the nonprofit 43North Foundation, which is dedicated to making investments in Buffalo’s startup economy. The foundation was set up last year to handle the proceeds of ACV Auction, which went public on the NASDAQ stock exchange at $25 per share. The foundation made its first investment earlier this year in Bitwise, a technology training and software development startup which is establishing a presence in Buffalo.
Akram and co-founder Siheun Song moved into Buffalo at the onset of the pandemic and lived here until about three months ago, when they moved back to New York City. Akram said the pandemic played a major role in limiting their ability to build a company here and ultimately they moved back to their hometown.
