HACKER Q&A
📣 tempsy

Will SPACs Replace VCs?


For anyone who follows the markets, there’s been an explosion in “blank check” companies called Special Purpose Acquisition Companies (SPACs) that go public with the primary purpose of acquiring a company, which allows emerging companies to go public at a much earlier stage than with multiple private rounds led by VCs followed by a public listing or IPO.

Ironically I’ve seen very little chatter about SPACs on VC Twitter but I suspect the reasoning is that they are quite the existential threat to traditional VC model. If an investor can simply raise $XYZ and go public as a “blank check” company then it completely side steps a VC’s role in bringing companies public. And as the acquired company it means you can achieve liquidity much faster than is typical going the traditional IPO path.

For those in the industry, is this an accurate assessment of the state of the industry? Are SPACs a massive threat to VCs? Or as founders, are SPACs something you’ve looked into over VC?

  👤 oneelectron Accepted Answer ✓
SPACs are 30 years old. See the history section here: https://en.wikipedia.org/wiki/Special-purpose_acquisition_co...

They also have a poor reputation, and for what seems like a good reason. It's a risky proposal that generally attracts a get-rich-quick kind of community. Examine the Nikola company and tell me how comfortable you'd be investing a sizeable chunk of your net worth in that.

I can't predict the future, but I can bet $10k I will die before SPACs get to even half of VC funding. Side pot of $1k that 50% of them fail their investors, and another side pot that one in the next decade will be a historically spectacular failure.

👤 sushshshsh
Is this kind of like what Long Island Iced Tea company did with their bitcoin pivot? Theoretically they could acquire a private company doing blockchain and become a publicly traded bitcoin company overnight right?