SPAC, or special purpose acquisition company, has been around for decades but it is only in recent years that it has gone mainstream, with 2020 being the thriving year. SPACs are essentially “shell companies” without any commercial operations and are created solely to raise enough money for an IPO to acquire another existing company. Because they do not specify who they will acquire when they IPO, they are also known as blank check companies.
SPACs raised a record of $13.6BN in 2019, 4X the amount raised in 2016. But 2020 is the year SPACs shine. As of November 2, 2020, SPACs have raised $62.5BN and racked up 169 IPO counts with an average size of $369.9MM this year according to Spac Insider. In the market slowed or completely paused by COVID-19, 2020 has become a common ground for SPACs
Smaller and generally private company owners find selling to a SPAC advantageous.
They can achieve higher prices than a typical private deal as a result of good quality sponsors of SPACs, including high profile names like venture capitalist Chamath Palihapitiya, former Speaker of the House Paul Ryan, and more.
They can avoid the traditional IPO process, and be supported by a bigger experienced partner to lead the way.
There’s certainty about the company’s valuation and equity capital raised, avoiding the broader marketing volatility typical of a traditional IPO.
Governance practices established in recent years have made SPAC acquisitions more shareholder-friendly.
High profile SPAC IPO deals in 2020
Zero-emission trucks startup Nikola Corp merged with VectorIQ for a $3.3BN value
Sports betting platform DraftKings merged with Diamond Eagle in a deal valued between $2-3BN
Telemedicine company Hims, Inc with Oaktree for $1.6BN
Healthcare service Clover Health with Social Capital Hedosophia for $1.2BN
DTC mattress and other sleeping products seller Purple by Global Partner for $1.1BN
If you’re interested to learn more about different investment terminology, PrivCo has a knowledge bank to answer all your immediate questions.
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Since last week, PrivCo has added: 1206 Companies | 119 Funding Activities | 124 M&A Deals
Funding & Deal Highlights:
Seed Funding Hermeus, a supersonic aircraft startup aiming to create a plane that can make a New York-London trip only 90 minutes long, raise $16MM Series A funding led by Cannan Partners.
Kandji, a San Diego-based company that runs an Apple enterprise management tool, close $21MM in Series A funding.
RealBlocks, a tech platform that allows access to alternative investments through its blockchain-enabled platform, raised $7MM Series A financing led by Crosslink Capital.
Jiko, a New York-based fintech firm raised $40MM in Series A led by Upfront Ventures and investment firm Wafra.
Series B Funding Forethought, a customer service company using AI and Natural Language Program to boost its capabilities, raised $17MM Series B funding.
International Deals GetYourGuide, a Swiss company that runs a business selling tickets for walks and tours, has closed $133MM in a convertible note, to help it keep running.
Streetbees, a UK company, raises $39MM in Series B funding. The survey app helps brands find out consumer attitudes while consumers get paid for their responses.
Acquisition Highlights Ipsy, a San Mateo, California-based beauty subscription service has acquired its Miami-based competitor BoxyCharm for $500MM and will form a merged company called BFA Industries.