Aura Air, an Israeli company that developed a smart air purification system, has filed for bankruptcy after failing to secure a deal with its U.S. rival Molekule. The company, which was valued at $60 million in 2021, has accumulated debts of about $13 million and has been unable to pay its employees and suppliers.
How Aura Air’s Technology Worked
Aura Air’s product was a device that could filter and disinfect indoor air through a four-stage purification process. The device used sensors to monitor the air quality in real-time and adjust the settings accordingly. The device claimed to capture and kill 99.99% of viruses (including SARS-CoV-2), bacteria, germs, and allergens.
The company also developed a mobile app that allowed users to control the device remotely and receive alerts and recommendations. The company marketed its product as a solution for homes, offices, hotels, schools, hospitals, and other indoor spaces.
How Aura Air’s Business Grew
Aura Air was founded in 2017 by brothers Aviad and Eldar Shnaiderman, who had a background in engineering and design. The company raised $4 million in seed funding from private investors and participated in several accelerator programs, including MassChallenge Israel and Plug and Play.
The company launched its product in 2019 and received positive feedback from customers and media outlets. The company also won several awards and recognition, such as the CES 2020 Innovation Award, the Red Dot Design Award, and the European Product Design Award.
The company expanded its operations to several countries, including the U.S., Canada, Europe, India, Japan, and Australia. The company also partnered with various organizations, such as the Israel Defense Forces, the Tel Aviv Municipality, the Hilton Hotel Group, and the Weizmann Institute of Science.
The company’s sales increased significantly during the Covid-19 pandemic, as people became more concerned about indoor air quality and virus transmission. The company reported revenues of $6.5 million in 2020 and projected revenues of $15 million in 2021.
How Aura Air’s Deal with Molekule Fell Through
In January 2021, Aura Air announced that it had signed a letter of intent to be acquired by Molekule, a U.S.-based competitor that also developed a smart air purification system. The deal was valued at $74 million in stock, which meant that Aura Air’s shareholders would receive 10.37% of Molekule’s shares.
However, the deal faced several challenges and delays due to regulatory issues, valuation disputes, and due diligence processes. The deal also faced opposition from some of Aura Air’s shareholders, who felt that the offer was too low and did not reflect the company’s true potential.
In July 2021, Molekule informed Aura Air that it was terminating the deal due to “material adverse changes” in Aura Air’s business. Molekule cited several reasons for its decision, such as Aura Air’s declining sales, negative cash flow, legal disputes, customer complaints, product defects, and intellectual property infringement.
How Aura Air’s Bankruptcy Unfolded
Following the termination of the deal with Molekule, Aura Air found itself in a dire financial situation. The company had spent most of its cash reserves on legal fees, marketing expenses, inventory costs, and salaries. The company also faced lawsuits from its suppliers, creditors, employees, and customers.
The company tried to raise more funds from its existing investors or find new buyers for its assets or shares. However, none of these efforts were successful. The company also tried to negotiate with its creditors to restructure its debts or reach a settlement agreement. However, these attempts also failed.
On August 27th 2021 , Aura Air filed for bankruptcy at the District Court in Tel Aviv. The court approved the company’s request and appointed two trustees to oversee the company’s liquidation process. The court also granted the company a temporary stay of proceedings to allow it to continue operating for a limited period.
The court stated that allowing the company to operate for a short time was preferable than liquidating it immediately. The court hoped that this would enable the company to find a solution that would benefit its stakeholders and preserve its technology.
