Steckenrider: SPAC Investor Redemption Risk Is Overstated
Troy Steckenrider · 20VC: SPACs. What Are They? Why Now? How Do They Change The Venture Landscape? Are They Better Than IPOs & Direct Listings? How Should Founders Think About Them? Kevin Hartz & Troy Steckenrider @ A* · Aug 31, 2020 · at 9:02
Troy Steckenrider, co-founder of A*, responds to concerns about investor redemption rights undermining contrarian SPAC deals.
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“The redemption thing is certainly a risk, but I think it's a little bit less risky than people actually make out when you actually kind of track the real world technicals in terms of the way it trades.”
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“I mean, I think it's something like 99% of deals have had a yes vote, of SPAC deals since like twenty-ten have had a yes vote.”
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“You get the founder shares regardless of whether the deal does well, and so there's a world where the company post-DSPAC could trade down. Investors have lost money, the company has lost money, And yet the SPAC management team would still walk away having done…”
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“And so from the company's perspective, this is a much easier and straightforward way to get to the public markets.”
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“For our SPAC, we plan to kind of address this when we're negotiating with a specific partner company to make sure that whatever deal we end up with, we are fully aligned.”
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“In the SPAC world, pipes are a little bit different, and I would say the analog in the SPAC world looks far more similar to an anchor investor in an IPO, where the pipe investor in a SPAC typically has done a lot of underwriting of the company, has gotten to m…”