Vertical Aerospace has been thrown a crucial lifeline, staving off potential bankruptcy at the cash-strapped air taxi startup.The UK-based company which makes electric vertical take-off and landing (eVTOL) aircraft secured the fresh funds from its largest creditor, American debt investor Mudrick Capital.The agreement, announced Monday, includes a $50mn cash injection and a substantial debt-to-equity swap. Mudrick will invest $25mn upfront and guarantee another $25mn in future funding, offset by contributions from third-party investors.Mudrick will also convert half of its $130mn in outstanding loans into equity at $2.75 per share, taking its ownership stake in Vertical to just over 70%. This move reduces Verticals debt burden while extending the repayment date for the remaining $65mn to December 2028.The of EU techThe latest rumblings from the EU tech scene, a story from our wise ol' founder Boris, and some questionable AI art. It's free, every week, in your inbox. Sign up now!Verticals founder Stephen Fitzpatrick whose stake will shrink from 70% to around 20% is stepping back from an operational role. He will remain on the board as a non-executive director. Despite the shift in control, Vertical will continue to operate from its headquarters in Bristol.The additional equity and stronger balance sheet will enable us to fund the next phase of our development programme and deliver on our mission to bring this amazing electric aircraft to the skies, said Fitzpatrick.The rescue deal comes at a crucial moment for Vertical, which has been burning through cash in a bid to get its VX4 aircraft tested, certified, and airborne by 2028.In September, Bloomberg reported that without additional funding, Vertical would risk running out of cash by March 2025. Stuart Simpson, the startups chief executive, said that Mudricks fresh backing will now extend its cash runway to the end of 2025.eVTOL startups have drawn huge investments in recent years, driven by the promise of revolutionising urban transportation with quiet, eco-friendly flights. Optimism and a fair bit of hype fueled early funding, but many underestimated the challenges of development, certification, and scaling production.As costs rose and timelines slipped, investor confidencesteadily waned, leaving many startups grounded. One of Verticals main competitors, German startup Lilium, filed for bankruptcy this month after failing to secure new funds.Vertical, which went public on the New York Stock Exchange in 2021, has lost 95% of its market value since the listing. While the bailout gives the company a lifeline for now, its future is far from certain. Story by Sin Geschwindt Sin is a climate and energy reporter at TNW. From nuclear fusion to escooters, he covers the length and breadth of Europe's clean tech ecos (show all) Sin is a climate and energy reporter at TNW. From nuclear fusion to escooters, he covers the length and breadth of Europe's clean tech ecosystem. He's happiest sourcing a scoop, investigating the impact of emerging technologies, and even putting them to the test. Sin has five years journalism experience and holds a dual degree in media and environmental science from the University of Cape Town, South Africa. Get the TNW newsletterGet the most important tech news in your inbox each week.Also tagged with