Sonder Lowers Valuation to $1.9 Billion as Market Conditions Change; Raises More Money

San Francisco’s short-term rental startup Sonder has lowered its going-public-through-SPAC valuation down to $1.925 billion from the earlier planned $2.2 billion, as market conditions change and SPACs face more headwind.

It has also pushed back the completion of its reverse merger deal with Gores Metropoulos II, the black check company backed by the Gores Group that is taking it public, from the earlier anticipated close October 28 this year to January 31, 2022, though the two insist they will close the deal by the end of the year.

That said there are some positives in the newly restructured deal between the two parties: Sonder will get an $110 million in additional capital from affiliates of Gores Metropoulos II and other leading investors, including Fidelity Management and others, in addition to the $200 million previously announced PIPE.

Also, Sonder has access to $220 million debt facility with existing PIPE investors, to be available following the closing of the merger, which Sonder says will be enough to fund its growth over the next several years.

"With this incremental investment, we will have ~$530M of capital at closing, in addition to up to $450M proceeds from the SPAC trust, which provides for a fully funded business plan upon closing," the SPAC said in a letter to Sonder team. "A key takeaway from today’s news is that our ambitious growth and expansion strategy remains unchanged and should be fully-funded. We believe the addition of this incremental funding brings stability and security, enabling Sonder to be appropriately capitalized to fund our continued growth over the next several years. We think that the combination of this incremental capital and our proactive response to changing market dynamics will put us in the best position to drive long-term value creation for our shareholders and employees."

Alec Gores, the buyout sponsor of the deal, told New York Times that the "market has shifted — and we totally get that...[a]s long as you have a great company, the market is going to go in 100 different ways, and we just have to be smart enough to recognize where the market is."

The full filing with the amended merger agreement is here.