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Matt Levine has the best ELI5 on this subject that I've seen: https://www.bloomberg.com/opinion/articles/2021-01-08/spac-magic-isn-t-free https://www.bloomberg

Matt Levine has the best ELI5 on this subject that I've seen: https://www.bloomberg.com/opinion/articles/2021-01-08/spac-magic-isn-t-free https://www.bloomberg.com/opinion/articles/2021-01-08/spac-m... Here's the high-level summary from that article, though there's a lot more detail that's worth digging into: > Here’s how a SPAC works: 1. You give me $10. 2. I put your $10 in a pool with a bunch of other people’s $10, held in a trust account at a bank. 3. I give you back one share in the pool (representing $10 of money in the pool), and one-quarter of a warrant to buy another share for $11.50. (The combination of the share and part of a warrant is sometimes called a “unit.”) 4. I try to find a company to take public within two years. 5. If I fail, I give you back your $10 with interest. 6. If I succeed, I merge the pool with the company, giving the company the money in the pool and giving you and your fellow shareholders shares (and warrants) in the new combined company. Also I get a bunch of shares and warrants in the combined company, as a reward for my work. 7. When I do this, I give you the choice to either (a) let your money ride and take a share in the new company or (b) get your $10 back, with interest.

mywittyname 6y ago
Can the general public invest in SPACs? Are there SPACs that target specific markets, like tech, finance, real-estate, etc?
- dehrmann 6y ago
  > Can the general public invest in SPACs Yes. I'm pretty sure the ticker symbol of this one is VGAC. The problem you get is this: https://vgacquisition.com/objective/ https://vgacquisition.com/objective/ > VG Acquisition Corp (VGAC) aims to invest in a strong business with a proven track record that can deliver attractive returns to public market investors by capitalizing on Virgin’s brand and global resources. I'm sure some target specific markets, but this one doesn't.
- tedunangst 6y ago
  https://spactrack.net/activespacs/ https://spactrack.net/activespacs/
dehrmann 6y ago
I don't see anything especially wrong with them and what they do because they're really just a way around the IPO paperwork and restrictions. Usually, a lot of that feels like a formality, but it did surface some interesting things about Wework. That said, it's a bet on the team, and you have no idea what they're going to find. It's a little like investing in a less-diversified, late-stage venture fund.
- r00fus 6y ago
  The investing public loses out on valuable information. It's an end-run around disclosures. That's not a good thing.
- itsoktocry 6y ago
  >they're really just a way around the IPO paperwork and restrictions Is this really where we are at? >Usually, a lot of that feels like a formality, but it did surface some interesting things about Wework. WeWork was one in a long list of these jackpots.

mywittyname 6y ago

Can the general public invest in SPACs? Are there SPACs that target specific markets, like tech, finance, real-estate, etc?

dehrmann 6y ago
> Can the general public invest in SPACs Yes. I'm pretty sure the ticker symbol of this one is VGAC. The problem you get is this: https://vgacquisition.com/objective/ https://vgacquisition.com/objective/ > VG Acquisition Corp (VGAC) aims to invest in a strong business with a proven track record that can deliver attractive returns to public market investors by capitalizing on Virgin’s brand and global resources. I'm sure some target specific markets, but this one doesn't.
tedunangst 6y ago
https://spactrack.net/activespacs/ https://spactrack.net/activespacs/

dehrmann 6y ago

I don't see anything especially wrong with them and what they do because they're really just a way around the IPO paperwork and restrictions. Usually, a lot of that feels like a formality, but it did surface some interesting things about Wework. That said, it's a bet on the team, and you have no idea what they're going to find. It's a little like investing in a less-diversified, late-stage venture fund.

r00fus 6y ago
The investing public loses out on valuable information. It's an end-run around disclosures. That's not a good thing.
itsoktocry 6y ago
>they're really just a way around the IPO paperwork and restrictions Is this really where we are at? >Usually, a lot of that feels like a formality, but it did surface some interesting things about Wework. WeWork was one in a long list of these jackpots.