The crazy phenomenon around FoodTech SPACs

Let’s say that you have a startup and want to go public. In the “old” world, you would go for a traditional IPO such as Beyond Meat’s. Would you want to avoid the high costs associated with this path, you can also envision a direct listing as Spotify did.

But now, the trendiest way is to use a SPAC or Special Purpose Acquisition Company. A SPAC is a publicly-traded company that has raised money under its founders’ name and which goal is to acquire a privately hold (which can be a startup) company and hence make it public. SPAC’s merits are simple: they are raising a lot of money, are driving up valuations, early investors win additional rights, and they are making deals simpler for everyone. You can take the same arguments for the risks associated (less scrutiny, insane valuations, etc.).

Here are some examples in the past couple of weeks:

What matters now is that many SPACs are full of cash and looking for prey to acquired. And to spice up things, SPACs have a limited time to make the acquisition (around 2 years).

Already a handful of well-developed FoodTech startups have announced that they were looking to get acquired by SPACs and will be public by the end of the year. If successful, these deals could attract many other startups, and we could have dozens of (20 to 30) FoodTech unicorns publicly traded in the next 2 years.

 

Looking in the past to see the future?

Leave a Reply