By Georgia Wells
October 13, 2016
Hyperloop One Inc. has hired a senior financial executive and raised $50 million in new financing to keep its development on track after an acrimonious lawsuit with the transportation startup’s co-founder.
Brent Callinicos, previously chief financial officer at Uber Technologies Inc., joined Hyperloop One this week as chief financial adviser. The role is important for the company as it tries to fund the costly development of a transportation network that can shuttle people and cargo through tubes at nearly the speed of sound.
Hyperloop One doesn’t have a chief financial officer. Company co-founder and chairman Shervin Pishevar said the role Mr. Callinicos is taking is one that typically leads to chief financial officer.
“This is a capital-intensive business,” said Mr. Pishevar, who also is co-founder of Sherpa Capital, which has invested in Hyperloop One, said. “This is moving actual things, steel, atoms. It’s not just a photo app.”
The new financing was led by Dubai’s DP World Group, one of the world’s largest port-terminal operators, which could also be the first beneficiary of the system.
The developments show how Hyperloop One is trying to move on from a split with Mr. Pishevar’s co-founder, a dispute that cast doubt on Hyperloop One’s ability to come to fruition.
In July, co-founder Brogan BamBrogan, who was also chief technology officer, and three other former executives sued Mr. Pishevar and the company, alleging mismanagement and breach of fiduciary duty.
One of the plaintiffs was William Mulholland, who was the most senior financial executive at the company until he left earlier this year.
Hyperloop One has dismissed the lawsuit’s claims as false, and it has countersued Mr. BamBrogan and three colleagues, alleging they breached multiple agreements. “Successful companies, especially ones that are growing and scaling fast, have had lawsuits like this,” said Mr. Pishevar. “It is not anything unique.”
Billionaire inventor Elon Musk floated the idea for a hyperloop system in a 2013 paper. Hyperloop One has signed more deals and performed more tests than its main competitor, Hyperloop Transportation Technologies Inc. But bringing the idea to life is a costly endeavor.
Hyperloop One’s new financing brings to $160 million the amount it has raised since it was launched two years ago. The fresh financing is debt that converts to preferred shares if the company raises another round of equity financing. Mr. Pishevar said Hyperloop One plans to raise fresh equity funding in the first half of 2017.
Hyperloop One will use the new money to work on building its first full-scale test of the transportation system, which Mr. Pishevar says is on track to be completed in the first quarter of 2017. Built at a test facility in the desert outside of Las Vegas, the prototype includes the system’s tube, vehicle and computer systems. It builds upon the initial test of the propulsion system that Hyperloop One conducted at the site in May.
But the first place to build a real hyperloop could be Dubai. DP World recently announced an agreement with Hyperloop One to explore ahyperloop system to move containers from ships docked at its port ofJebel Ali to a new inland container depot in Dubai.
Hyperloop One plans to demonstrate more about what the transit system will look like at an event next month in Dubai. “The pieces are in place to enable Dubai to be the first place, but that is yet to be determined,” Hyperloop One chief executive Rob Lloyd said.
In his new role, Mr. Callinicos will initially focus on funding and modeling how the company will make money, Hyperloop One said.
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