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Comment by jy1 | Hacker News Reader

It's not "hard tech" per se. Rather it's companies that are (essentially) pre-revenue and/or pre-product.

E.g. Ginko did $100m in rev in 2021 and is at a 20B market cap.

Why would a company do this? Simple: Money. Spac sponsors "guarantee" a ~20B market cap. Investment bankers in a regular IPO might offer $4-5B (still 50x sales).

So what's the difference? Spac sponsors are willing to take "venture" style risk, and traditional IPO underwriters are not.

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Another way to think about this is: Traditional IPO underwrites are fairly risk adverse. They will value "high risk" companies in certain ways. E.g. How would you value a self driving company with 0 revenue? For bankers? pretty conservatively.

However the "market" has people that can and will value these companies more than IPO underwriters. Spac sponsors are essentially glorified "venture" style investments, that also happen to take the company public (and take a fairly large cut in return).

An alternative might be to have a "direct listing" without underwriters, however companies are unable to raise funds in a direct listing.

The market cap is $2.5B, not $20B.

https://www.cnbc.com/2021/09/17/ginkgo-begins-trading-on-the...

That link is wrong. It's closer to $20b. https://www.bloomberg.com/news/articles/2021-05-11/ginkgo-sa...

Umm. Spac management can "sell out" and gets coupons to buy stock so.. Does the SEC require the target company or the acquisition company file something akin to an S1 filing for the target company or ?

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