announced, you can vote to not participate and get your money back. This is a “free option.” If the deal looks good, you can participate and make money as the company grows. If you don’t like the deal, you simply get your money back. You can partner with proven management teams Venture-capital and private-equity funds are typically closed to retail investors as a result of regulatory constraints. Ownership in a SPAC allows investors to partner with top investment professionals and benefit from their skills. SPAC sponsors also typically have a significant amount of capital invested alongside the investors, so they’re even more motivated. You’re protected The SPAC is registered with the SEC and subject to extensive regulation. At this point, many well-established provisions exist in the typical SPAC that serve to protect investors’ interests. Today, SPACs are well-regulated investment vehicles, just like other publicly traded stocks. The gross proceeds among SPACs over the past 12 months has exceeded all of the money from 2013 through 2019 combined, with online gambling business DraftKings (DKNG), men’s wellness firm Hims, and electric- vehicle charging network ChargePoint choosing to go public via SPAC.
THE DEATH OF THE TRADITIONAL IPO Last year was abuzz with many long-awaited “unicorns” finally going public. Ride-sharing firms Uber (UBER) and Lyft (LYFT), plant-based food producer Beyond Meat (BYND), and exercise-equipment company Peloton (PTON) all hit the public markets last year. Home-rental company Airbnb, delivery firms Postmates and Instacart, and online trading platform Robinhood expected to make their public debuts in 2020. But when the COVID-19 pandemic caused the U.S. stock market to crater this past winter, these companies decided to indefinitely postpone their IPOs. However, the uncertainties in the market didn’t even faze the SPAC market... Over the past few years, the market for these IPOs and number of SPACs has grown dramatically. From 2015 through mid- 2021, more than 750 SPAC IPOs raised approximately $230 billion. SPACs are becoming an increasing percentage of the IPO market. Last year, SPACs represented 27% of all IPOs and 23% of the capital raised. Over the past three years, they made up 20% of the entire IPO market. At the time, 2019 was the biggest year ever for the industry, with 59 SPACs raising $13.6 billion... But 2020 broke many records in the red-hot SPAC market... And 2021 has blown both years out of the water, with 330 SPACs and $105 billion of cash ready to deploy.
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