Canoo, a mobility startup that once seemed positioned to upend the auto industry with a new approach to transportation technology, has filed for bankruptcy and shut its doors. This unexpected crash has led to massive interest in the company’s short history. People are most curious about its links to notorious high-profile investors David Stern and Jeffrey Epstein. These extra people are closely tied to Canoo — including, critics say, the tangled web of investment pitchmen. This lack of transparency was a major cause of the company’s collapse.
Founded in 2017, Canoo’s mission was to transform the future of urban mobility, including distinctively creating electric vehicles specifically designed for ridesharing and subscription services. The company emerged from stealth mode in early 2018, but its launch was marred by a mysterious set of investors whose identities were not initially disclosed. This lack of clarity would soon prove to be a sore point as legal battles began to play out between some of Canoo’s highest-ranking officers.
David Stern, a high profile player in the investment community, was one of Canoo’s earliest investors. Whether it was his close over a decade relationship with pedophile investor Jeffrey Epstein, who, along with Trump, repeatedly brainstormed various ways to invest in opportunities. In 2008, as Stern was starting to invest in China, Stern turned to Epstein for investment ideas. This laid the groundwork for their later partnership on other electric vehicle companies like Canoo, Faraday Future, and Lucid Motors.
Stern sold Canoo to Epstein as a long-shot bet on the future. Their negotiations were sparked by a chain of emails in which they discussed the possibility of bringing an investor into the company.
“I heard that they’re raising. Can you get information from Morgan Stanley?” – Sean O’Kane summarizing David Stern
These communications speak to both the extent of their collaboration, and what a truly committed partnership in the mobility space looks like. It soon became clear that Canoo was rife with self-inflicted crises.
Canoo was experiencing difficult leadership issues. Much of that battle was waged by its founder, whose stealthy maneuvering earned him a 38% stake in the company. This internal power struggle only added to the chaos outlining Canoo’s path—and eventual bankruptcy.
In an ironic twist, the true identities of Canoo’s investors were revealed during a lawsuit involving top executives of the company. However, this legal battle exposed murky details about Canoo’s financing. Yet it initiated profound questions about the accountability of its funders. Not being able to show tangible proof of their participation, any potential stakeholders or customers were left without visibility on their participation.
Canoo’s Silicon Valley dreams as a new mobility company were undoubtably bolstered by the greater technological and transportation shifts happening across the industry. The acceleration of electric vehicles, automated mobility and other new transportation solutions have fascinated funders and spread excitement among riders and buyers. Yet, as we will explore below, Canoo’s downfall is an important cautionary tale about the importance of transparency and governance in growing industries.
As news continued to filter through about Canoo going into bankruptcy, the spotlight soon turned to its investors. The implications of the connection between Stern and Epstein are alarming, particularly considering Epstein’s damaging legacy. His 2008 guilty plea for soliciting prostitution from a minor has brought a newfound scrutiny over the ethical guidelines of investment-related dealings.