Special purpose acquisition companies — commonly known as “SPACs” — are becoming increasingly popular in recent years as a way for companies to reach the public markets. While there were only 59 companies that chose to do a “SPAC IPO” in 2019, more than 360 have already taken place thus far in 2021. The total value of funds raised from those SPAC IPOs this year has exceeded $112 billion, and there are reportedly more than 300 more SPACs that have raised funds and are looking for a target.

But what will the modern SPAC Race mean for investors? Is this indeed a more capital-efficient way for companies to raise money and go public? Or are investors throwing money at an unproven and potentially dangerous new trend?

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To answer those questions, 7investing Lead Advisors Simon Erickson and Steve Symington are digging deeper into the recent SPAC craze. In part one of their two-part podcast series, Simon and Steve give an overview of how SPACs are structured and why financial sponsors are incredibly important to their success. The two also discuss specific metrics that investors should be watching and specific risks they should consider.

Publicly-traded companies mentioned in this podcast include Virgin Galactic and SoFi. 7investing Lead Advisors may have positions in the companies that are mentioned. This interview was originally recorded on July 8th, 2021 and was first published on the same day.

Timestamps

00:00 – Overview of SPACs and comparing them to traditional IPOs and direct listings

8:06 – Understanding how SPACs are structured: share prices, financial sponsors, and warrants

12:05 – The people factor of SPACs

14:40 – Private Investment in Public Equity (PIPE) funding

20:25 – Risks of investing in SPACs

Transcript

Simon Erickson  00:00

Okay, hello everyone and welcome to this edition of our 7investing podcast. I’m 7investing founder and CEO Simon Erickson joined by my colleague, my northern friend up in Montana, our lead advisor Steve Symington. Steve, how are you doing on this lovely afternoon?

Steve Symington  00:15

I am well. It’s summertime and I’m excited to talk about SPACs.

Simon Erickson  00:19

We are we’re going to be chatting today about these special purpose acquisition companies. SPACs are really kind of all of the rage these days. But are they a good idea for investors? And what are a couple of things we should actually be paying attention to as we’re looking at SPACs as possible investment opportunities.

Simon Erickson  00:36

Steve and I will dig into those a little later. And in fact, this is going to be part one of a two part discussion we’ll have about SPACs. In part two, which will be coming later, we’ll be taking a look at individual companies that have IPO’d on this idea. But in this one, we’re going to be talking a little bit more about the overview of what SPACs are, why they’re interesting, and what we actually look for as investors.

Steve Symington  00:58

Yeah, and I’m excited for that second part. And I think what we originally planned to make this a single episode where we just kind of talked about investing in SPACs. And then I decided to hop on Twitter and ask for questions. “Hey, what do you guys want us to cover?Any specific companies? Specific SPAC questions? And we got a bunch of responses and some really good ones. And some of those SPACs that were asked about in that thread we’re pretty familiar with already. But some of them were not. And we wanted a little more time to dig in and give you guys a better answer. But for now, this will be a good overview of SPACs. And what to watch, how they’re structured, et cetera.

Simon Erickson  01:36

Absolutely, Steve. So maybe to set the framework for this, this is something that I thought was some really interesting trivia that I’ll ask to you and also to our audience that’s listening. Is do you know in what year the world’s very first documented IPO took place? Initial public offering, what year?

Steve Symington  01:54

I mean, was it like the 1600s or something? It’s like way back when.

Simon Erickson  01:58

Right! Spot on Steve. 1602 was when the Dutch East India Company actually allowed an ownership stake for individuals to buy into the company. So 420 years ago. Man, that was quite a quite a long time ago.

Steve Symington  02:11

Right. Older than America, right.

Simon Erickson  02:14

And, you know, it really hasn’t changed that much in 420 years. It is the same process of raising money. You have underwriters, which kind of give you a safety net, where you’re going to make that much money when you go public and then it releases to the public markets to trade freely for individual investors, such as such as ourselves. But a lot of companies have gotten a little frustrated with this IPO process. They’ve gotten frustrated with that first day IPO pop, where if they just issued shares out to the public through what has become known as a direct listing, they could have captured all that money for themselves rather than giving it to the financial underwriter. And so that kind of led to the direct listing as an alternative to that. But a direct listing does not put money on the company’s balance sheet. It is cashing out the insiders directly by selling their shares, and then they get those those proceeds. But it doesn’t go to the business itself. And so we’ve started seeing a third option here emerge. The SPAC option, special purpose acquisition company. Where a publicly traded shell company can raise funds from public investors and then merge with a private company, creating a single entity that trades together through a new ticker that is also on the public markets.

Simon Erickson  03:28

Steve, I will say these are becoming quite increasingly popular. Just to throw some statistics before we get into the nitty gritty too much. In 2019, there were 59 SPAC IPOs that were collectively worth $13 billion. By 2020, there were 248 SPAC IPO, so four times as many, worth $83 billion. And Steve, if you remember, we hosted a team podcast with 7investing near the end of 2020. Back in November. In three years is the number of SPACs to be launched in 2023 going to be higher or lower than that number? Do you remember what you said? Or do you remember that conversation?

Steve Symington  04:08

Something to the effect of “Oh, goodness, higher.” It was sort of sort of you could read that as absolutely much higher. So I get that. That’s the very popular vehicle. And it has been true indeed.

Simon Erickson  04:20

Even in 2021, thus far, we’re only really halfway through the year. And we’ve already seen 363 SPACs IPO this year worth $112 billion. And there’s more than 300 that are searching for the target for SPAC acquisition. So maybe kind of with that 10,000 foot level in place, Steve, why is it that companies would even want to do a SPAC? Can we talk a little bit about how these are structured and why companies are starting to pursue these.

Steve Symington  04:46

Yeah. And in his case, he was working with Chamath Palihapitiya. I think I said that right. Mostly. And you know, he’s the Social Capital guy. And you really do need to look at it kind of the the track record of who you have. And I guess this is interesting before. I guess we should second segue into the next section. This also raises the question of what are the downsides, if any, of not only investing in SPACs as an investor ourselves, but also for the companies looking to go go public via SPAC? How can we approach those questions? What the catch, I guess, and if any?

Steve Symington  04:46

Yeah. So you know, part of it is sort of a simplified streamlined auction. They take less time to complete than a traditional IPO. They take less paperwork, there’s there’s lower advisory fees than traditional IPOs. And I think one of the classic examples, and now classic, even though this was just late 2019, I guess you think about it. This is one of the key reasons Virgin Galactic went public via SPAC in late 2019. And a lot of people credit Virgin Galactic, whether that’s wrong or right, for sort of accelerating the process in 2020 because it was very high profile SPAC that went public. And it’s sort of allowed other high profile businesses to kind of follow suit. And, you know, then earlier this year, actually Branson was asked – it was some conference or something – and someone just directly asked him, “Why did you choose to go public via SPAC with Virgin Galactic?” And he quipped — and this is an oversimplification, of course — but he said “I’m impatient. SPAC gets through all the rigmarole and public companies. Yes. I thought that’s great. Let’s do it.”

Steve Symington  05:49

And that sort of in a nutshell, you know, maybe not the impatience, but there are the reasons they might want to go public via SPAC. But it is definitely simpler and much more direct way at lower cost to to bring your company public. And with the right merger vehicle, it can be a pretty compelling way to do so.

Simon Erickson  06:10

Yeah, it really is interesting. I mean, if you’re if you’re a company like Virgin Galactic, you know, you’re Richard Branson, and you want to go public, kind of the option that was on the table for you is to go out there and you hire investment bankers. You hire kind of the Credit Suisse’s and Goldman Sachs’s all over the world. It’s “okay, how much is our company worth? How many of our shares should we bring public? And what’s the right price that we’d bring those public? And how much are we going to capture from that?” And you get an answer back, and then you collect that money and those IPO funds, go to your business, you put them on the balance sheet. And then you go and you see it pop 100% the first day. And then the people that are selling those shares in the public markets capture that benefit.

Simon Erickson  06:46

The process that Richard Branson took for Virgin Galactic, as you mentioned, was much faster and a lot less paperwork than the traditional IPO. And also he’s not working with large banks like that. He was working with individuals, which are coming to be known as financial sponsors. Where kind of the jockeys that are making these trades take place in the first place. Yeah.

Simon Erickson  07:06

So I think that’s a perfect segue of a couple of things that we think that investors should watch for. Or at least be cognizant of, if you’re going to invest in SPACs. And this will lead like we said to our further conversation, part two, where we’ll actually be looking at a lot of these metrics for kind of some of the companies that have come public through SPAC IPO in the recent months, and then a couple that we think are fun that are on the horizon as well.

Simon Erickson  07:48

But the first one, Steve is kind of the structure itself. We know that when you’re buying into a SPAC, you’re buying into a shell company.Where all the money is going. You’ve got all these assets that are going to be at $10 a share, where you’re raising capital in the first place. And then that is trying to merge with a privately traded company to buy a percentage ownership of that company as well. And we also hear about these things called warrants. Which a lot of times, in addition to those, those initial percentage stakes that you’re taking, the financial sponsors who are doing the deals can get additional shares awarded to them if they find the right company to merge with in the first place. Any thoughts on kind of the overall structures? Where investors are looking at these kinds of things of how they’re being structured. You think I kind of at the top level. That kind of catches your attention when you’re investing in a SPAC?

Steve Symington  09:00

Yeah, I think one of the first things I need to keep in mind before we maybe get to the the warrants and the the sponsored shares options is that we shouldn’t get too hung up on the $10 share price, right? Share price taken in isolation means nothing. And I’ll repeat it: share price taken in isolation means nothing. It’s just a function of how many shares they’ve chosen to issue right? So you need to keep in mind, you know, really how many shares are coming to market and really know what the valuation premium is.

Steve Symington  09:34

So you can you can look at growth rates, what kind of company are we looking at? Is this kind of a value play where you need to bring in new management to kind of squeeze more value evidence out of an existing business concept? Is this a super high growth pre revenue company? So $10 per share is that starting point and and a lot of people are going to get hung up on that. They’re so cheap $10 a share! That doesn’t mean anything really. So try and ignore as best you can the share price in isolation.

Steve Symington  10:01

But also, you know, this isn’t…when we talk about warrants, this isn’t a selfless act that these SPAC sponsors are taking out. There is something in it for them. Often they come out owning a significant chunk of the resulting public business. And like you said, that will come often in the form of warrants where they can actually buy shares at a preset price going forward. It’s basically a call option. And you can also have, like, specific, like sponsor shares, that kind of come down the road and could potentially dilute existing investors going forward. So you want to kind of keep in mind what people are paying themselves. Who owns what as you come out of the SPAC.

Steve Symington  10:43

And we’ve also learned a fair bit. Let’s take Virgin Galactic again, as an example about who owns what, right? Branson I think still owns through various Virgin Company affiliates, Virgin Group owns almost a quarter of Virgin Galactic still, right? Chamath actually did have it was like a $200 million stake in the company personally, that he ended up selling because he wanted to. He’s still Chairman of the board, by the way. But he wanted to fund other investment opportunities. They’ve got a lot of moving parts. A lot of irons in the fire. Kind of busy folks putting a lot of money to work. And he had to sell that and hated to do it. And I could say, right now, he probably really hates to do it. Because shares are rallying really hard. I think they’re up like 16% today. It’s Thursday the 8th as we record this. Because we’re going into the weekend when Branson’s going to take his first flight. But he sold his personal stake. But Chamath still owns, I think something like 15.9 million shares through the actual SPAC merger vehicle. So he owns them indirectly. And these are all little things. Little nuances that you need to kind of keep in mind when you look at the resulting ownership of the businesses. Specifically who gets what. Who still has warrants. Who owns what stakes. It’s not always perfectly straightforward. And sometimes these things will come to light. And there’s a lot of misunderstanding surrounding them. So a lot a lot of little details to to absorb.

Simon Erickson  10:51

I think that the “people” detail is the one that’s really important for SPACs as opposed to typical IPOs. Right? When Facebook IPOs, you’re getting into Facebook itself. You’re buying into that company. Doesn’t matter who the underwriters are so much as the business that you’re getting into. When you’re buying into a SPAC, the shell company itself, you’re betting on the dealmaker rather than the target itself. So like we said, when a lot of the times we’re setting a price target of $10, you’re buying and before you even know what the company they’re going to merge with is, going to be you have the option to put your money up into this shell company they can use to acquire or to merge with another business. But a lot of the times people are putting money out there just because they have faith in the dealmaker.

Simon Erickson  12:55

And I think that this kind of is the great segue to the second thing that I want to talk about, which is who is that dealmaker? What kind of strategy are they going to have on your behalf as a shareholder of this newly merged company? If it’s someone like Chamath Palihapitiya, who’s going to look for people like Richard Branson, a lot of times he’s going to look for companies that are so in the future that they’re not capturing a whole bunch of cash flows right now. You don’t have a ton of assets. For something like Virgin Galactic, you don’t have a whole lot of revenues, maybe companies like these are going after biotech companies. So it’s really, really innovative science, really cool technology, not a whole lot of hard assets on the ground. And for that you’re going to need to find somebody who’s well connected with some of the most innovative entrepreneurs that are out there. And Chamath has shown through Social Capital, he’s got a pretty nice Rolodex of being able to do that.

Simon Erickson  13:43

There’s another popular financial sponsor, popular that a lot of people know who they are, Bill Ackman. Bill Ackman has a very different approach to SPACs. You know, he’s really good at wringing out efficiencies from businesses that do have hard assets in the ground that he can say, “Okay, I think that we would really get margins up if we follow this playbook that I followed for decades.” He wants to bring a lot of that expertise into the SPAC market. And so you know, you see kind of acquisitions like Universal Music Group. Very different company there than something like Virgin Galactic is because it’s a very different style from the financial sponsor that’s collecting the public equity funds in the first place.

Steve Symington  14:20

Yeah, those are all excellent points. I think actually another one that we should keep in mind, we’re talking about who owns what, who the sponsors are, what what are the outstanding shares? What’s the SPAC looking to acquire? We should also keep in mind that there’s oftentimes larger corporations who also buy into the SPAC in the process. And we call this PIPE funding. It’s private investment in public equity. So PIPE funding gives these companies an opportunity to secure an equity stake in what could be this next big thing. You know, if they’re excited about a particular SPAC and they want to own a piece of it. They have that option, and actually earlier this week, you mentioned that Google invested into Planet Labs upcoming SPAC. Right.

Simon Erickson  15:04

Yes, satellites.

Steve Symington  15:04

Yeah, really interesting. And that’s not terribly surprising when it comes to Google, this global Internet behemoth that has all sorts of moonshot bets, right? But kind of neat to see a massive, publicly traded corporation investing in a small SPAC. It almost gives them, in addition to maybe some of these little bolt on acquisitions that they’re used to making, gives them an easier way to put some of their growing cash flows to work.

Steve Symington  15:30

We’ve also seen this with Palantir. Recently, which I think was just in recent weeks, they invested in eight different SPACs. Everyone’s like, “Wait a second, what’s Palantir doing?” I think they put it was $132 million to work in eight different SPACs in the form of PIPE investments. And this showed up in one of their 10q SEC filings and people were like, “Whoa, that’s interesting.” So Palantir, in addition to all of its other interesting merits, is suddenly a major PIPE investor in SPACs. So yeah, that’s that’s just something to keep in mind is that it’s not just individuals. It’s not just retail investors, sometimes big corporations, or, you know, they’re raising the eyebrows of these companies that think “You know what? These are great places to put our money to work.”

Simon Erickson  16:18

It’s a great point, Steve. We’re starting to see more and more interconnectedness between corporations out there, right? We’ve kind of gotten used to the Warren Buffett holding company example. You know, Berkshire Hathaway goes out, acquires companies, and then brings all the cash flows into his war chest of cash that he deploys later on for massive acquisitions. And that’s been great. And no one’s going to say that Warren Buffett was a bad investor. He’s made fortunes for people for decades now. But this is giving more options for corporations to play smaller bets. Where you don’t have to go out and you don’t have to buy, you know, a $10 billion or $50 billion company or oversized as it might be. You can place $132 million of investment into a publicly traded stock fund like this, like you have seen Palantir do. Like you’ve seen Google do. And this is kind of a way of spreading your bets and saying, “Hey, if we if we catch on to something that really is intriguing, interesting and intriguing out there. We get some benefits out of this, obviously.” Satellites is of interest to Google. Palantir has got a whole lot of interest in a whole lot of industries right now. Yeah, it’s kind of a maybe it’s an investment, but maybe it’s also from the business side of things, a way to kind of set the scene for future business that operationally might be beneficial as well.

Steve Symington  17:28

Yeah. And another thing to keep in mind is there are these individual investors, whether it is the SPAC sponsor or corporate insiders, I guess let’s let’s focus on them right now. There are lockup expirations for SPACs as well. So normally, when we’re talking about lockup expirations for recently IPO’d companies. Right, so if a company has recently gone public through that traditional initial public offering, then you have a lockup expiration that’s usually like six months or something right around 180 days. And after that point, insiders are allowed to sell all or some of their stocks. And this is something that can potentially put selling pressure on a stock. But in other cases, people it’s kind of Much Ado About Nothing because these insiders say “You know what, I want to keep hanging on and I’m not going to sell a share.” And that happens sometimes. And then you have everyone breathing a collective sigh of relief the stock just kind of does its own thing. But with SPACs, from my understanding at least with some cursory research, the lockup expirations tend to be a little bit longer. So you have a lockup expiration of between maybe 180 days and a year, right? And then you’ll have that. So something to keep in mind. And as you’re researching SPACs, there’s there’s no shortage of information to dig through. And you’ll very rarely see people or maybe a quick article online doing a comprehensive review of a SPAC prospectus. And I was happy earlier as we were kind of perusing some of the responses on the Twitter feed when people were asking us what companies to look into. And one of the companies on our radar was SOFI. And I think that’s another chairman’s SPAC right? And that was you that said, “Hey, here’s SoFI’s prospectus.” And I was like, Oh, good. And I could see like the scroll down bar get longer, and I was like, wow, okay, we’ve got some homework to do. But you can find, if you poke around there, they’re SPAC perspectives. And it’s essentially the equivalent of an S1 filing when it comes to an AI in a traditional IPO where you have a company stepping in and they say “Here’s everything you know about our business.” And you know, you’ll have some some very Investor Relations that you kind of need to approach objectively. Because they’re going to try to convince you to invest in their business. But there’s also risks in such that you need to keep in mind and everything is there. At least it should be legally. But you know, there’s there’s no shortage of due diligence to perform when it comes to trying to figure out whether a SPAC is worth your investing dollars.

Simon Erickson  20:12

And Steve, we are going to do a lot of that due diligence here in the next couple of days. You and I are going to go through those prospectus documents that have been filed for SPAC IPOs. It is going to be interesting to see what we find. Maybe before we get into the nitty gritty of that, at a high level, what do you consider to be risks of investing in a SPAC? What is something that you would be wary of, or at least caution people to be aware of, before they jump in and start buying into SPAC IPO?

Steve Symington  20:39

Right. I mean, we’ve mentioned a couple of them already. Look at some of the warrants, look at how handsomely some of these SPAC sponsors are rewarding themselves for their effort. It’s like a big, valuable golden pat on the back they’re giving themselves sometimes. So you know, make sure that the compensation they’re providing themselves in the form of warrants isn’t necessarily excessive. And of course, that’s an objective description, right? Is what’s excessive? And we can we can look back and forth, lots of different publicly traded companies and determined that, that perhaps management’s rewarding themselves a little too ritually. But that’s something to keep in mind is the size of the warrants, but also the state of the business. Are we looking at a business that that’s going public via SPAC because it was growing at some exorbitant rate, and now things are slowing down significantly and they’re trying to make the most of it? Are they saying, alright, this is the perfect time because we just increased our sales tenfold. But next year, it’s going to be up 5%. And you’re going to see some of those that there that are kind of slowing down. Or maybe they’re growing from a really tiny base and their revenues chunky and they’re not going to be cashflow positive for 10 years or something crazy like that. That doesn’t necessarily mean you rule them out as a potential investment. But it’s kind of the same risks that I would look at as I approach investing in any normal publicly traded company. Is what’s the state of the business? Is this going to be like a high growth pre revenue business? Or is this more of like a value play that needs to be kind of squeezed, and massaged to make the most of their existing business? Those are the kinds of things I look at, to start anyway. And sometimes you have something else that just kind of pops out at you. But case by case basis, right? There’s it’s almost as much an art form as it is just your ability to make raw objective decisions based on the information they give you.

Simon Erickson  22:39

Yeah, I would completely agree, Steve, I mean, especially I think you nailed it when you said, “You know what, keep an eye on the warrants and the dilution for those high growth, even pre revenue companies.” I mean, there is basically a time for dealmakers. They have a timer that goes off as soon as the SPAC raises money. They typically get two years to close a deal, if that long. Sometimes shorter than that. But it kind of pushes them into an uncomfortable position of maybe accepting terms or going after companies that they weren’t initially in their Tier A or First Tier of what they’re looking for. They said, “No, I get this call option of a warrant if I complete the deal. I’ve got all this money that’s burning a hole in my pocket. Okay, I’ll accept a more egregious valuation on behalf of myself and all of my shareholders for this SPAC in exchange for closing the deal. Because that’s how their pay day is going to come. And so I think that’s going to be something I’m going to be really keeping an eye on. Is what are the terms for this particular deal versus something that might be similar, that another sponsor got out there? I think that’s going to really quickly weed out – when you look at the objective evaluating of that it’s going to be in the returns of these companies – you can really quickly see who’s making good deals and who’s getting hosed on a bad deal. But I think that would be something you’ve got to keep an eye on as an investor. Is first of all, we talk so much about who is the financial sponsor? What’s their track record? How are they doing for their investors on their behalf as well? And then, who’s closing the good deals versus who’s getting egregious valuations? It’s going to be, I think, a rampant problem for a lot of smaller SPACs. There’s too many companies that are probably pursuing … too many sponsors out there raising money right now over too few viable long term businesses. And that’s going to be an interesting way to see how that washes out over time.

Steve Symington  24:26

Yeah. And as you’re speaking, it kind of made me made me think back to a couple points that maybe we could have made at the very beginning of this podcast. But maybe it’s also a good way to kind of kind of go full circle there. There are kind of two different states that you can invest in these SPAC companies right now. For example, you can invest in Virgin Galactic by buying its publicly traded shares. The post merger, it’s all finished. It is now a publicly traded company, it has merged so you don’t have to go back and buy the Social Capital. I can’t remember the exact name.

Simon Erickson  24:56

IPOA.

Steve Symington  24:57

Right, the first question about that. Yeah, that’s what it was. And now SPCE is the actual formal ticker. But there are other companies that people will speculate or there’ll be a report that comes out and says, “You know what, this SPAC merger vehicle company is in talks to merge with this company that wants to go public.” So you could buy shares of that, that SPAC vehicle, before the deal actually happens. And sometimes they’ll pop in advance because they’re excited about the deal. I think I was scrolling down the list trying to find the company. One of them was the Virgin Group acquisition. And Next Gen Acquisition Corp, I think is what it was called, NGCA was recently reported to be considering or in talks with a deal to bring Virgin Orbit, which is Virgin Galactic’s sister company, public. So Virgin Orbit does like small satellite launches and stuff and kind of a similar fashion where they drop a rocket off, that takes something into into orbit. But Virgin Orbit, you could buy shares of Next Gen Acquisition Corp NGCA. And then, once the merger is complete, the shares will transition and you will own shares of Virgin Orbit after everything finishes. So there’s kind of those two different stages. You can buy a company that used to be a SPAC. But it still is like people referred to it as a SPAC company, because that’s the way it went public. Or you could buy the SPAC before the deal even merges.

Steve Symington  26:22

But the other thing that you mentioned is that there is a time limit for these kind of SPAC vehicles to strike a deal. And if they don’t make a deal, by the time that time limit is basically exhausted, then the money that they raised gets returned to investors. So if you bought 10 shares of this SPAC vehicle at 10 bucks a share and you put $100 to work or something in it and they don’t make a deal, by the time their time limit is up, then you get your money back. And it’s just cash back in your brokerage account. So they don’t obviously want that to happen. And like you said, that can be sort of, you know, if it’s crunch time, you want to make sure that they’re actually making a good deal for you in the process. But if they don’t, you get it back. And I guess it’s almost like a “Hey, no harm, no foul. Thanks for letting us borrow your money for a bit.”

Simon Erickson  27:10

Yeah. Like you said, Chamath is chairman of Virgin Galactic now, right? He’s the Chairman of the combined post merger company, right

Steve Symington  27:21

Yeah. And that was sort of one of those things.

Simon Erickson  27:26

Yeah. I mean, just fantastic Chamath got to be Chairman. Yeah, I think that the guy if I remember correctly, Social Capital, got 49% ownership of Virgin Galactic and Chamath goes on and becomes the Chairman. I mean, that’s really good terms for his side of that equation. There’s other SPACs you see, where the SPAC shell company is only getting 10% stake and all of the operating and kind of control of the company stays in the hands of their management that was before the SPAC even takes. So it’s going to be really interesting to see, kind of comparing terms and comparing deals. See who’s getting really, really favorable terms and seeing what they’re doing with it. Just like you’d mentioned, the timer is is ticking for them to complete it

Okay, great. So Steve and I wanted to give an introduction to SPACs in this part one of our two part podcast. When we come back for part two, we’re going to be actually looking at some specific companies. We’re going to get under the hood of those and really look at the terms, look at the warrants, understand what these deals are looking like for investors. And give our personal thoughts on some of the recent SPAC IPOs and a few that are also coming up in the future.

So on behalf of my colleagues, Steve Symington, I’m Simon Erickson. We’re both here from 7investing, where it is our mission to empower you to invest in your future.