Is the SPAC boom just too good to be true?
In 2019, 59 SPAC IPOs raised $13.6 billion. In 2020, 248 SPACs raised $83 billion. In 2021, 228 SPACs raised $73B and it’s only March folks!
The majority of these SPACs are averaging about $250M. The minute they go public, the clock is on and it has up 24 months to find a company to merge with.
From a founder and CEO’s point of view, the SPAC route to go public is much less risky for the company compared to an IPO. The CEO sign a deal with the SPAC sponsor for a fixed and negotiated price, and the deal is done! From an venture investor’s point of view, this is certainly another way for companies to exit and go IPO.
However from a public market investor point of view, do these companies deserve to go public? Do they have consistent and predictable revenue with a healthy growth rate? Do they have a strong management team?
Will this SPAC bubble burst in 2021? Only time will tell…
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