3 ms·
It's not "hard tech" per se. Rather it's companies that are (essentially) pre-revenue and/or pre-product. E.g. Ginko did $100m in rev in 2021 and is at a 20B m
by jy1 5y ago
It's not "hard tech" per se. Rather it's companies that are (essentially) pre-revenue and/or pre-product.
E.g. Ginko did $100m in rev in 2021 and is at a 20B market cap.
Why would a company do this? Simple: Money. Spac sponsors "guarantee" a ~20B market cap. Investment bankers in a regular IPO might offer $4-5B (still 50x sales).
So what's the difference? Spac sponsors are willing to take "venture" style risk, and traditional IPO underwriters are not.
- jy1 5y agoAnother way to think about this is: Traditional IPO underwrites are fairly risk adverse. They will value "high risk" companies in certain ways. E.g. How would you value a self driving company with 0 revenue? For bankers? pretty conservatively. However the "market" has people that can and will value these companies more than IPO underwriters. Spac sponsors are essentially glorified "venture" style investments, that also happen to take the company public (and take a fairly large cut in return). An alternative might be to have a "direct listing" without underwriters, however companies are unable to raise funds in a direct listing.
- sjg007 5y agoUmm. Spac management can "sell out" and gets coupons to buy stock so.. Does the SEC require the target company or the acquisition company file something akin to an S1 filing for the target company or ?
- bpodgursky 5y agoThe market cap is $2.5B, not $20B. https://www.cnbc.com/2021/09/17/ginkgo-begins-trading-on-the-nyse-after-completing-spac-merger.html https://www.cnbc.com/2021/09/17/ginkgo-begins-trading-on-the...
- jy1 5y agoThat link is wrong. It's closer to $20b. https://www.bloomberg.com/news/articles/2021-05-11/ginkgo-said-to-agree-to-17-5-billion-merger-with-sloan-s-spac https://www.bloomberg.com/news/articles/2021-05-11/ginkgo-sa...
- deleted 5y ago[deleted]