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Role of PIPEs in SPACs 💰

Role of PIPEs in SPACs 💰
July 6, 2021

The Daily Stack is a daily private market insights newsletter by PrivCo, a private company intelligence platform. Read our previous insights.
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Hope you had a restful and patriotic holiday weekend! We're shifting from our regularly scheduled Tuesday Investor Highlight to focus on the topic du jour, PIPEs as SPAC investors. We'll be back tomorrow with a spotlight on Sequoia Capital.



 

If you’re a regular reader of the Daily Stack, you know that SPAC deals have made a huge comeback in the last year, with 349 SPAC IPOs already this year according to SPACInsider data. Today we’re discussing the latest craze in SPAC coverage, PIPE deals.

A Brief Overview of SPACs & PIPEs

SPACs, or special purpose acquisition companies, have become a favorable means of making an initial public offering because these public special acquisition companies have already done the hard work to take themselves public. Private companies enjoy the set price they’re offered in valuation as an increasing number of SPACs approach the end of a mandated two-year purchase period and vie for a small pool of eligible companies with which to merge.

But the results have been less than promising. According to a Renaissance Capital study of 313 SPAC IPOs from 2015 to late 2020, the average return on completed mergers was -10%, compared to the 46% return of traditional IPOs. Investors are wary of investing in SPACs seen as too eager to make a purchase on a company they hardly understand. Meanwhile, regulators are scrutinizing deals more closely.

However, not all SPACs are bad SPACs. Increasing attention (and confidence) has been given to PIPE deals (private investment in public equity) in which accredited investors, including institutional investors like hedge and mutual funds, will buy up a large portion of stock in a SPAC, generally at a discounted price. The influx of cash helps the SPAC to acquire larger businesses as well as provides enough capital to support the company in the event SPAC investors choose to sell the stock after a target company is announced.

While the concept isn't a new one (SPACs were wildly popular during the 2008 recession when it was difficult to raise capital), expect to see more articles devoted to the topic, as attention goes to where the money is flowing.

This week’s IPOs
 

LinkDoc Technology : Chinese software company applying AI to reach medical solutions

IPO: LDOC

Expected Share Price: $17.50-19.50

Shares: 10.825MM


Unicycle Therapeutics: Biotechnology focusing on kidney disease

IPO: UNCY

Expected Share Price: $5-6

Shares: $4.55MM
 

Since last week, PrivCo has added:
2099 Companies | 184 Funding Activities | 123 M&A Deals

Funding & Deal Highlights:

Olive raises $400MM from Vista Equity Partners

AI Software & Internet Services •  Round H • Columbus, OH
 

Sword Health Technologies raises $85MM from General Catalyst Partners

Health Care Providers • Round C • New York, NY
 

Shogun Labs raises $67.5MM from Insight Partners

E-commerce Software & Internet Services •  Round C • Walnut, CA
 

ServiceTitan raises $200MM from Thoma Bravo

Software & Internet Services •  Round G • Glendale, CA
 

Alio Medical raises $20MM from Thomas Krebs 

Health Care Equipment • Round B • San Francisco, CA
 

Versa Networks raises $84MM from Princeville Capital and RPS Ventures

Technology Services • Round D • San Jose, CA
 

Trainual raises $27MM from Altos Ventures 

SaaS Software & Internet Services •  Round B • Scottsdale, AZ
 

Open Exchange raises $23MM from Kingfisher Investment Advisors

Communications Software & Internet Services • Round D • Lincoln, MA
 

Pietra raises $15MM from The Founders Fund

E-commerce Software & Internet Services • Round A • New York, NY
 

FightCamp raises $90MM from New Enterprise Associate & Connect Ventures

Consumer Products • Equity • Costa Mesa, CA
 

Ridepanda raises $3.8MM from Porsche Ventures & Proenza Ventures

Automotive & consumer Vehicle Retail • Seed • San Francisco, CA
 

Kickoff raises $30MM from Portage Ventures 

Fintech Software & Internet Services • Round B • San Francisco, CA
 

Entera raises $32MM from Goldman Sachs Asset Management

Real Estate • Round A • New York, NY
 

Tomo Mortgage raises $70MM from Ribbit Capital

Mortgage Software & Internet Services • Seed • New Canaan, CT
 

Apton Biosystems raises $24MM from Casdin Kern Capital 

Biotechnology • Round A • Pleasanton, CA
 

Tenovos raises $8MM from Progress Ventures 

Software & Internet Services • Round A-1 • New York, NY
 

Buzzer Media raises $20MM from Canaan Partners & Sapphire Sport 

Streaming Software & Internet Services • Round A • New York, NY
 

Noname Security raises $60MM from Insight Partners 

API Software & Internet Services • Round B • Palo Alto, CA
 

Microverse raises $12.5MM from Northzone Ventures 

Education Services • Round A • San Francisco, CA
 

Osmind raises $15MM from Future Ventures

Health Care Software & Internet Services • Round A • San Jose, CA
 

Physna raises $56MM from Tiger Global Management 

3D Software & Internet Services • Round C • Cincinnati, OH
 

Hello Cake raises $4MM from Lerer Hippeau Ventures 

Consumer Products • Round A • Calabasas, CA
 

Articulate Global raises $1.5BN from The Blackstone Group

E-Learning Software & Internet Services • Round A • New York, NY
 

JPMorgan Chase acquires OpenInvest

Specialty Finance • Acquisition • San Francisco, CA
 

Goldman Sachs Private Equity provides $230MM in growth capital to 4G Clinical

Health Care Services • Growth Capital • Wellesley Hills, MA
 

Angeles Equity Partners acquires Xanitos 

Health Care Services • Acquisition • Newtown Square, PA
 

Clayton, Dubilier & Rice to acquire Vera Whole Health 

Health Care Services • Acquisition • Seattle, WA
 

Swedencare AB acquires Vetio Animal Health for $181MM

Pharmaceuticals • Acquisition • Saint Louis, MO
 

ServiceTitan acquires The Aspire Software Company

Landscape Software & Internet Services • Acquisition • Chesterfield, MO

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