Truly terrible performers multiply among startups taking the SPAC route to market – Crunchbase News
The overwhelming majority of venture-backed companies that have gone public through Special Purpose Acquisition Companies, or SPACs, are trading well below their former highs this year. The list of truly terrible artists, meanwhile, has grown in recent months as sales accelerate.
Those were the general conclusions of a Crunchbase News review of the PSPC offerings this year. Several leading names, in industries ranging from insurance to autonomous driving to baby care, have performed particularly well. Many of the more recognizable names, including WeWork, Grab, and BuzzFeed, are also down sharply.
So which are the poorest performers? Using a combination of Crunchbase data and SPAC merge records, we decided to select a few.
Turns out it was hard to do. This is because the list of SPACs that has fallen by more than 30% since the announcement of a merger is quite long. We’ve bundled most of them into one list, which has just under 50 companies:
Of course, some do less well than others. To illustrate, we present a few names below, based on criteria such as total stock price decline, valuation declines, and present value compared to previous private funding. Without further ado, here are our featured names:
N ° 1: Metromile
The pay-per-mile auto insurance provider was a prodigious venture capitalist fundraiser, attracting at least $ 290 million in known venture capital funding, according to data from Crunchbase. In late 2020, the San Francisco-based company announced its intention to go public through a merger with blank acquirer INSU Acquisition Corp. II, which injected more than an additional $ 200 million into the company.
But since the completion of the SPAC merger in February, Metromile has been doing exceptionally poorly, with shares recently trading around $ 2.25, down from around $ 19 in mid-February. Last month, another entry-level insurer, Lemonade, announced plans to acquire the company in a $ 500 million stock purchase transaction, ensuring that previous Metromile investors will not have the possibility of having an increase.
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No. 2: See
View, based in Milpitas, Calif., Has been around since 2007 and has garnered more than $ 1.6 billion in venture capital funds over the years for an attractive business model proposition: it makes “smart glass” for consumers. buildings that use artificial intelligence to automatically adjust the amount of daylighting in response to the sun.
In November 2020, the company announced that it would take the next step: making its public market debut through a merger with SPAC CF Finance Acquisition Corp. II in a deal that added hundreds of millions more to its balance sheet.
Fast forward to today, and View recently traded well below $ 4, with its post-merger stock performance pretty much on a straight downward path. It doesn’t help that the company has been put on notice by the Nasdaq for failing to file its 10-Q quarterly report for the second quarter of 2021.
No. 3: Owlet
In February, Owlet, a tech-funded venture capitalist juvenile products maker, announced plans to merge with SPAC Sandbridge Acquisition Corp. The deal set an initial enterprise value of around $ 1.07 billion for the Lehi-based company, best known for its vital signs monitoring “smart socks” for infants.
Recently, Owlet has traded around $ 3 a share. Since its merger finalized in June, stocks have never crossed the $ 10 mark.
N ° 4: health of the clover
Nashville-based Clover Health, a provider of Medicare Advantage plans for the elderly, is unlike your typical venture-funded startup that has become PSPC. Still, the 8-year-old company managed to raise more than $ 900 million in venture capital before agreeing to go public in late 2020 through a merger with a blank buyer led by “SPAC king” Chamath Palihapitiya. .
Things haven’t gone so well since. Clover shares were hovering just above $ 4 earlier this month, after peaking at over $ 22 this summer. Investors would have been frightened a few weeks ago by the company’s healthcare ratio for its Medicare patients, which measures costs as a percentage of premiums earned, and which is well above the target level.
N ° 5: Xos
Xos, a producer of electric trucks and powertrains, seemed to fit the SPAC boom well. Electric vehicles are a hot space, and Xos’ talk about decarbonizing public transit was quite in fashion. There was therefore optimism in February when the 6-year-old Los Angeles-based company announced its intention to go public through a merger with blank buyer NextGen Acquisition Corp.
But public investors have other ideas. Since its merger finalized in August, Xos shares have been steadily declining, recently closing below $ 3. In its latest earnings report, the company said supply chain disruptions had slowed the ramp-up in production.
Lessons Learned from PSPC
It was a banner year for private companies breaking the $ 1 billion valuation mark in unicorn territory. So, it seems natural to assume that public markets would also be receptive to growth stage and venture capital firms in hot industries with compelling business models, even if they are far from profitable.
But the big SPAC boom of 2021 seems to tell a different story. While many mergers with blank check acquirers work early, it is quite common for these companies to see sales of shares in the following months.
Could they bounce back? Sure. But so far, things are largely not off to a good start.
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