Primer on SPACs with Kevin Hartz and Troy Steckenrider of A* and AONE

We dive into everything you need to know about SPACs — what they are, why they're a compelling alternative to IPO/DPOs, and how they might play an even more important role in startup financing going forward — with two of the very best people to teach us: Kevin Hartz and Troy "SPAC Professor" Steckenrider of the newly-minted $200m SPAC, AONE.

TL;DR

• SPACs are an alternative path for companies to go public, however until recently they were mostly obscure and little-known/used.
• Meanwhile, the traditional IPO process has become onerous and broken: it takes 9+ months of company time, yet investors get only 15 minutes of management access and must make a decision in
• SPACs provide (in theory) a better path: ~2 months of company and investor time spent together, the net result of which is a large cash infusion at an appropriate equity price via a liquid public stock that anyone can buy/sell. In other words, what IPOs are supposed to look like.
• SPACs themselves also provide an interesting option for investors: each one is essentially a publicly traded "atomic" growth fund that will invest in just one company. You as a retail investor can go buy shares in e.g. AONE, Dragoneer's SPAC, Bill Ackman's SPAC, etc, whereas you could never get access to their traditional funds. (which are only open to select large institutions)
• SPACs are also interesting to large institutions themselves: rather than commit large sums of capital upfront to blind-pool funds, they can invest company-by-company with whomever they like, and take back their capital whenever they don't like a deal.

Links

• A* and ONE: https://www.a-star.co
• John Luttig's great Substack piece on SPACs: https://luttig.substack.com/p/spac-attack-everything-a-founder
• Bill Gurley on SPACs as an attractive alternative to IPOs/DPOs (posted after recording): https://abovethecrowd.com/2020/08/23/going-public-circa-2020-door-3-the-spac/