What Does The SPAC Craze Mean For Innovation Funding?

While it won't be what the year is best remembered for, for tech investors, 2020 will go down as the year when so-called "special purpose acquisition companies" (SPACs) took the innovation landscape by storm. A SPAC is an alternative to a conventional initial public offering (IPO) in which an investor group takes a shell company public through its own IPO and then uses the proceeds from the IPO to acquire a private company, which now becomes the new publicly traded company. Investors essentially get to outsource their due diligence to the SPAC sponsor, and the private company gets to bypass the risk and indignities of an IPO roadshow and simply negotiate a price directly with the SPAC sponsor.