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Cunningham notes that the trends that led to the popularity of the SPAC predated the pandemic (and hopefully will outlast it). Increasingly, investors and bankers see more innovation around the traditional IPO process. As private markets have grown flush, for instance, venture-backed businesses such as Spotify and Slack have found less need to raise cash in public markets, but they still require a way for their investors to cash out.
“I think across direct listings, IPOs, and SPACs, we’re going to see people get more creative with what elements of each of those they want to leverage as they come to the public markets,” Cunningham said. “Now we have a menu [of options to go public]. Companies can choose an IPO if they want the infrastructure and the shareholder base, or a direct listing if they want to reduce their cost of capital, or a SPAC if they want control over negotiating terms with a single counter-party.”
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