As the SPAC frenzy continues, questions arise about how much the market can absorb –
Summary
If business reporters are privately skeptical of SPACs, they are reserving judgment, possibly because save for some highly concerning cases — like when the electric truck startup Nikola was accused of fraud — there isn’t much to criticize yet. The argument that most investors have for creating a SPAC — which is that a lot of so-called unicorn companies are ready to be publicly traded — resonates, too, given how bloated the private market has become. In the meantime, some of the merger deals that critics have long expected would begin to unravel have not, like Virgin Galactic, the space tourism company that kicked off SPAC mania when it went public in the fall of 2019. Ed Sim of Boldstart Ventures in New York is one of few VCs in recent months to say outright, when asked, that his firm isn’t considering raising a SPAC any time soon. Last week, for example, Bloomberg Law shared its analysis of the companies that went public as a result of a merger with a SPAC dating back to Jan. 1, 2019 (and for which at least one month of post-merger performance data is available).