SPAC movement may rest however, it will be back

SPAC movement may rest however, it will be back

The rate of space firm amalgamations with special purpose acquisition corporations (SPACs) may be decelerating. However, the trend is not over. This is as per investors speaking at TechCrunch Sessions: Space 2021.

“Investors are still attempting to identify and make heads or tails of stocks,” says Shaun Maguire. Shaun is a partner at Sequoia Capital. “And a lot of the SPACs have underperformed. I think that will make it a bit of a more complex SPAC environment in 2022.”

Tess Hatch is the partner at Bessemer Venture Partners. Tess agrees to add that firms may battle in the near time. This is in order to raise money via private investment in public entity (PIPE) contracts that customarily accompany SPACs.

“While we do have hundreds of SPACs still exploring for a business to merge with, the PIPEs have become congested,” Hatch says. “Maybe next year, they will clear, and we will have another trend.”

Yet, “SPACs are here to stay,” says Lisa Rich. Lisa Rich is –
  • Founder and managing partner at Hemisphere Ventures LLC’s founder and managing partners
  • COO and Founder at Xplore Inc.

About a dozen space firms announce SPAC amalgamations in the past year. Rich anticipates some of the firms that formed SPACs and complete unions in order to line up new contracts.

SPACs are especially well suitable to space and other “deep tech” firms, says Maguire. “It is often hard to say long-term stories all through the conventional preliminary public offering process. This is whereas it is much simpler with SPACs,” he adds.

Overall, SPACs have been a blessing to the space sector. This is because they provide liquidity for space start-up investors. That example will be “useful for the next generation of space firms after the footsteps that Rocket Lab, Spire, and the dozen other space companies lined this year,” Hatch adds.

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