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i long suspected SPACs were a scam, and said as much, but reading the details of how this SPAC scam works... smells a lot like fraud. notable that the SPAC mar
by readonthegoapp 4y ago
i long suspected SPACs were a scam, and said as much, but reading the details of how this SPAC scam works... smells a lot like fraud.
notable that the SPAC market took hits when 1) the government merely suggested that maybe SPACs were a scam that needed to be regulated (using more nuanced language, of course), and then again when 2) the government actually proposed some regulations that would prevent the fraud. but maybe that's just the nature of business.
how did SPACs work? find some private company A (e.g. Bird -- the e-kick-scooter company) with little to no chance of ever making it to an IPO by traditional (read: non-fraudulent) means, SPAC suitor finds co-conspirator investor company CC (e.g. Palantir) to enter fake contract with private company A guaranteeing that company tons of revenue over some ridiculously short amount of time -- presumably paying for actual goods/services, which allows the SPAC (e.g. Chamath) to do his overhyping routine on the investor shopping channel, CNBC, to lure in retail investors (read: the marks) about the nature of the private company A's prospects going forward, consummate the SPAC / IPO, then everyone on the take tries to get their money out before the ponzi scheme implodes.
good work, if you can get it.
then Chamath out here lecturing everyone about how VC industry is a ponzi scheme. presumably, like SBF, he just wanted his cut, and then got angry for being called out for it, so went the (Canadian sprinter) Ben Johnson route -- yeah, I'm corrupt, but everyone is corrupt, so spare me the pikachu face.
i don't know why Coindesk has been so publicly and strenously calling for SBF to be jailed, but be interesting to see if Chamath gets the same treatment. hopefully for him, his investors are/were not rich enough to request prosecution.
- bfeynman 4y agoEery if you replace "SPACs" here with Startups and VCs... isn't that how YC works as well? They buy revenue for all their startups and then offload it on new investors they bring in....
- bombcar 4y agoThen you start noticing how many VC companies are using products from other VC companies …
- slowhand09 4y ago[flagged]
- rchaud 4y agoYC was supposed to be small in scale, $100k tops if I remember. That would buy a tiny amount of runway these days, but certainly not Airbnb/Uber levels of subsidized prices that lead to the easy sales.
- PaywallBuster 4y agoyour interpretation of SPACs seem very cynic In the end it's just a "shortcut" for a private company to go public by acquiring an already listed company Retail investors tend to loose, but just the same as they would with a proper IPO or any crypto ICO
- bfeynman 4y agoYour interpretation of SPACs is very lacking. The shortcut they provide is often to circumvent normal due diligence that would show probably fundamental problems with companies operations. Sure normal companies may go down after IPO - but that's after banks perform their own investigation, and most importantly line up large institutional buyers that will lock up the float and tend to keep price more stable.
- moneywoes 4y agoExactly. How many spacs are positive roi since being released
- owlninja 4y agoDraftKings maybe?
- throwaway4736 4y agoDraftKings is down bad. They’re getting their lunch stolen, marinated, barbecued, and eaten by FanDuel.
- deleted 4y ago[deleted]
- mason55 4y agoThe way this manifests, and the actual substantial difference between an IPO and a SPAC, is that you can't provide forward-looking revenue guidance in your S-1 (IPO filing docs). For awhile people were saying that an interpretation of the rules meant it was ok to provide that guidance if you went public via SPAC, and the SEC didn't quickly put a stop to it. You can't lie about or misattribute past revenue no matter what, IPO or SPAC, that would be fraud, but in an SPAC you can say "we project that even though we had no revenue this year, based on our product roadmap and sales pipeline we will have $5B revenue in 2024". In an IPO you can't say anything like that. So, you ended up with a bunch of companies just making up future revenue projections and there's nothing holding them to it. In the end the SEC basically said "eh, we're going to provide some new guidance on how we're interpreting those rules, you probably weren't allowed to do that anyway, but now we're going to make it real clear that you're not allowed to do that, and maybe we'll go back and say you were never allowed to do that in an SPAC and you were all violating securities law."
- qualudeheart 4y ago> the government merely suggested that maybe SPACs were a scam that needed to be regulated Could the changed interest rate environment have something to do with $PLTR`s problels?