Growing interest in blank-cheque vehicles among Silicon Valley

Ribbit Capital is forming a special purpose acquisition company to target fintech businesses, in a sign of the growing interest in blank-cheque vehicles among Silicon Valley investors. The venture capital firm plans to raise $600 million for the Spac, which could be made public as soon as early August… The firm is working with advisers to structure the offering… The plans are coming together as a host of other venture capital firms consider forming Spacs or pushing their start-ups into deals with the shell companies, which have historically suffered from a lack of transparency and associations with short-term investors, such as hedge funds. Spacs raise money from investors to acquire companies and take them public, usually within a two-year timeframe. The vehicles have recently experienced a surge in popularity, raising $13.5 billion in the first half of the year — double the amount raised during the same period in 2019… But Spacs have only recently begun making inroads in Silicon Valley, following a string of deals with high-profile companies such as the space tourism group Virgin Galactic… Advocates for Spacs said they were a quicker and easier way for companies to go public compared with traditional initial public offerings. But they can also be costly, with sponsors typically taking 20 per cent of the Spac’s equity, and have historically attracted companies that could not go public through other means. 

Miles Kruppa