1 00:00:10,800 --> 00:00:14,240 Speaker 1: Hello, and welcome to another episode of the Odd Thoughts podcast. 2 00:00:14,320 --> 00:00:19,239 Speaker 1: I'm Tracy Allaway and I'm Joe Wisenthal. Joe, you've heard 3 00:00:19,239 --> 00:00:23,759 Speaker 1: of SPACs, right, Yeah, I absolutely I've heard of them. Um, 4 00:00:23,800 --> 00:00:25,800 Speaker 1: you know, I've heard about them for a while, so 5 00:00:25,920 --> 00:00:30,000 Speaker 1: called blank check companies, but they've definitely been one of 6 00:00:30,040 --> 00:00:34,479 Speaker 1: the big stories of especially in the last couple of months. Right. 7 00:00:34,520 --> 00:00:37,120 Speaker 1: And for those that don't know, SPAC stands for a 8 00:00:37,159 --> 00:00:42,880 Speaker 1: special purpose acquisition company and they're basically these blank check firms, 9 00:00:43,320 --> 00:00:48,479 Speaker 1: shell companies that set out to buy other companies, uh 10 00:00:48,520 --> 00:00:50,960 Speaker 1: and make money off of them. And it's a way 11 00:00:51,040 --> 00:00:54,280 Speaker 1: for people to get involved with those companies without the 12 00:00:54,320 --> 00:00:59,520 Speaker 1: company's actually having to i p O in the public market. Right. 13 00:00:59,680 --> 00:01:03,840 Speaker 1: And the interesting thing is that the SPAC is public 14 00:01:03,920 --> 00:01:06,000 Speaker 1: right away, so the SPACK does the i p O. 15 00:01:06,800 --> 00:01:09,320 Speaker 1: It trades and so of course there's always a lot 16 00:01:09,360 --> 00:01:11,839 Speaker 1: of you know, there's venture capital, and there's private equity. 17 00:01:11,880 --> 00:01:16,000 Speaker 1: There's always companies that are financial companies that are buying 18 00:01:16,040 --> 00:01:18,959 Speaker 1: other companies. But this is a situation in which the 19 00:01:19,280 --> 00:01:24,000 Speaker 1: buyer the show goes public, it raises money in that offering, 20 00:01:24,520 --> 00:01:26,840 Speaker 1: and then it goes out in search of an actual 21 00:01:26,880 --> 00:01:30,360 Speaker 1: real business to buy, right, so you're sort of pre 22 00:01:30,560 --> 00:01:34,360 Speaker 1: funding acquisitions and you don't know what they are going 23 00:01:34,400 --> 00:01:38,240 Speaker 1: to be exactly. Now, the funny thing about SPACs is like, 24 00:01:38,440 --> 00:01:43,000 Speaker 1: I don't remember that much about them before two I 25 00:01:43,000 --> 00:01:45,200 Speaker 1: don't know why, but apparently that was the last time 26 00:01:45,240 --> 00:01:48,840 Speaker 1: that everyone was talking about spacts, Right, Well, I think 27 00:01:48,880 --> 00:01:53,080 Speaker 1: that's right, And I think that they do historically have 28 00:01:53,280 --> 00:01:56,720 Speaker 1: this reputation because of you know, when you hear like 29 00:01:56,800 --> 00:01:59,800 Speaker 1: blank check company, you hear like blank check that typically 30 00:01:59,800 --> 00:02:03,320 Speaker 1: does that have like historically great connotations and anything, But 31 00:02:03,400 --> 00:02:05,440 Speaker 1: you hear like blank check company, and it's like, wait, 32 00:02:05,680 --> 00:02:08,440 Speaker 1: I'm handing money over to this company and I have 33 00:02:08,560 --> 00:02:10,440 Speaker 1: no idea what they're going to do with it except 34 00:02:10,480 --> 00:02:12,440 Speaker 1: that I hope they're going to make a good acquisition. 35 00:02:13,120 --> 00:02:17,040 Speaker 1: So historically I think they have sort of a questionable reputation, 36 00:02:17,160 --> 00:02:20,400 Speaker 1: although part of our discussion today is is that changing. 37 00:02:20,800 --> 00:02:23,720 Speaker 1: But it also tends to be the case that they're 38 00:02:23,760 --> 00:02:29,040 Speaker 1: associated with periods of you know, boom speculative speculative periods, 39 00:02:29,080 --> 00:02:32,000 Speaker 1: and so you mentioned the pre crisis period, last crisis, 40 00:02:32,000 --> 00:02:35,320 Speaker 1: and of course you mentioned now and you know, historically 41 00:02:35,320 --> 00:02:39,520 Speaker 1: they do seem to be associated with periods of speculative 42 00:02:39,560 --> 00:02:43,840 Speaker 1: appetite show we say, yeah, exactly. I mean the term 43 00:02:43,960 --> 00:02:46,840 Speaker 1: blank check company kind of screens too much money in 44 00:02:46,840 --> 00:02:50,600 Speaker 1: the system, doesn't it um, But you're exactly right. That's 45 00:02:50,600 --> 00:02:54,160 Speaker 1: the big debate. Now. We saw lots of SPACs before 46 00:02:54,280 --> 00:02:56,800 Speaker 1: the two thousand eight financial crisis kind of kicked the 47 00:02:56,840 --> 00:02:59,600 Speaker 1: air out of the market's tires, and now spacts are 48 00:02:59,639 --> 00:03:03,160 Speaker 1: coming ac. I think so far in we've had over 49 00:03:03,480 --> 00:03:07,680 Speaker 1: sixty five deals for something like twenty four billion dollars. 50 00:03:07,720 --> 00:03:11,440 Speaker 1: Everyone is talking about them. There's all types of different structures, 51 00:03:11,440 --> 00:03:15,040 Speaker 1: some are more controversial than others. But the big question 52 00:03:15,240 --> 00:03:18,040 Speaker 1: is is this a sign of some sort of excess 53 00:03:18,080 --> 00:03:22,640 Speaker 1: in the market. Are we actually protecting investors through these structures, 54 00:03:22,760 --> 00:03:26,679 Speaker 1: or is this a way to funnel money to sponsors 55 00:03:26,880 --> 00:03:31,280 Speaker 1: or corporate owners. So today we are going to dig 56 00:03:31,400 --> 00:03:35,040 Speaker 1: into all of those questions. Uh, And I'm really excited 57 00:03:35,080 --> 00:03:39,520 Speaker 1: to say we have Kelly driscoll. She's a board director 58 00:03:39,560 --> 00:03:44,480 Speaker 1: at a spack called Fusion Acquisition Cores. She's also a 59 00:03:44,520 --> 00:03:48,360 Speaker 1: long time executive over at State Street Global Advisers, so 60 00:03:48,400 --> 00:03:50,440 Speaker 1: we're really happy to have her on. Kelly, Welcome to 61 00:03:50,480 --> 00:03:53,000 Speaker 1: all thoughts, Thank you. It's a pleasure to be here 62 00:03:53,040 --> 00:03:56,920 Speaker 1: with you today. So Kelly, maybe just to begin with, 63 00:03:57,480 --> 00:04:01,240 Speaker 1: could we could we maybe discuss why ice bacts are 64 00:04:01,440 --> 00:04:07,320 Speaker 1: experiencing this resurgence now, why now at this moment? Sure, 65 00:04:07,360 --> 00:04:09,960 Speaker 1: I think the big wine now is the volatility in 66 00:04:09,960 --> 00:04:14,560 Speaker 1: the market. So certainly with the coronavirus and here in 67 00:04:14,600 --> 00:04:20,440 Speaker 1: the US the uncertainty around the upcoming elections, there's incredible volatility, 68 00:04:20,520 --> 00:04:24,159 Speaker 1: which tends to be puts a damper on traditional I 69 00:04:24,320 --> 00:04:28,000 Speaker 1: p o s with that much volatility, and so SPACs 70 00:04:28,120 --> 00:04:30,880 Speaker 1: are an alternative to I p o s. It's a 71 00:04:30,880 --> 00:04:36,480 Speaker 1: way for private companies to basically go public by being acquired, 72 00:04:37,040 --> 00:04:39,880 Speaker 1: as Joe had mentioned, by a spect that is already 73 00:04:39,920 --> 00:04:45,280 Speaker 1: publicly traded. And two, go back to some of the 74 00:04:45,320 --> 00:04:48,320 Speaker 1: comments that you made on the evolution. You're absolutely right 75 00:04:48,400 --> 00:04:52,000 Speaker 1: that one of the reasons they you maybe haven't heard 76 00:04:52,000 --> 00:04:56,600 Speaker 1: of them, you know, since the early two thousands, is 77 00:04:56,880 --> 00:04:59,920 Speaker 1: because that's when they got to got to receive the 78 00:05:00,080 --> 00:05:05,440 Speaker 1: lot of mixed reactions and had some mixed reputations in 79 00:05:05,480 --> 00:05:09,120 Speaker 1: the marketplace. But there were some regulatory and listing changes 80 00:05:09,240 --> 00:05:13,560 Speaker 1: in two thousand eleven. The regulations made it easier to 81 00:05:13,600 --> 00:05:17,160 Speaker 1: approve acquisitions because the acquisitions in the end have to 82 00:05:17,200 --> 00:05:20,320 Speaker 1: be approved by the shareholders of this back. And then 83 00:05:20,360 --> 00:05:24,400 Speaker 1: in two thousand seventeen, the New York Stock Exchange revised 84 00:05:24,440 --> 00:05:29,320 Speaker 1: its listing requirements to mirror nasdex requirements. So you saw 85 00:05:29,720 --> 00:05:33,680 Speaker 1: more SPACs listing on the New York Stock Exchange. But 86 00:05:34,200 --> 00:05:37,400 Speaker 1: kind of going to what you said, why why now? 87 00:05:37,480 --> 00:05:40,600 Speaker 1: Why so much? Because the I p O, the traditional 88 00:05:40,640 --> 00:05:43,880 Speaker 1: I p O market has really not closed down, but 89 00:05:43,920 --> 00:05:46,760 Speaker 1: there's been such a damper on it that, uh, companies 90 00:05:46,800 --> 00:05:50,600 Speaker 1: looking to go public or looking for alternative alternative vehicles. 91 00:05:52,279 --> 00:05:54,120 Speaker 1: I want to dig into that. There's so much I 92 00:05:54,120 --> 00:05:56,919 Speaker 1: want to dig into, but let's just start with for 93 00:05:57,040 --> 00:06:03,200 Speaker 1: people unfamiliar with the sort of simple will structural governance 94 00:06:03,440 --> 00:06:08,880 Speaker 1: mechanics of how it works, the fundraising process, why people 95 00:06:09,520 --> 00:06:14,599 Speaker 1: agree to lock up money with a management team, the 96 00:06:14,720 --> 00:06:18,480 Speaker 1: obligation on that management team, and then how that decision 97 00:06:18,960 --> 00:06:23,520 Speaker 1: comes to in terms of selecting a company to essentially buyout, 98 00:06:23,560 --> 00:06:27,719 Speaker 1: just like sort of walk through the basic spack steps. Sure, 99 00:06:27,880 --> 00:06:31,359 Speaker 1: so basically you start with a sponsor who decides that 100 00:06:31,440 --> 00:06:35,039 Speaker 1: they really want to set up a spack and they 101 00:06:35,080 --> 00:06:38,560 Speaker 1: basically get what we call founders shares or what sometimes 102 00:06:38,600 --> 00:06:41,479 Speaker 1: it's referred to as the sponsor promote, so they have 103 00:06:41,800 --> 00:06:44,280 Speaker 1: founder shares in the spack. Those are the first years 104 00:06:44,320 --> 00:06:48,440 Speaker 1: that come in and then they file an S one. 105 00:06:48,600 --> 00:06:51,440 Speaker 1: They go through the steps of having the spack go 106 00:06:51,720 --> 00:06:56,920 Speaker 1: public um with the traditional underwriter. The units are then 107 00:06:57,080 --> 00:07:02,440 Speaker 1: offered in in an underwriting and they typically are offered 108 00:07:02,440 --> 00:07:05,640 Speaker 1: it ten dollars a unit. We can talk about Acman's 109 00:07:06,480 --> 00:07:09,800 Speaker 1: It's back later on, but the typical structures they're offered 110 00:07:09,800 --> 00:07:15,280 Speaker 1: a ten dollars unit. The public has, including retail investors, 111 00:07:15,320 --> 00:07:19,880 Speaker 1: have the ability to buy those public shares, and excuse me. 112 00:07:19,960 --> 00:07:24,200 Speaker 1: Usually the units consist of a share and a fraction 113 00:07:24,200 --> 00:07:27,960 Speaker 1: of a warrant, so and the warrants are typically exercisable 114 00:07:28,160 --> 00:07:31,400 Speaker 1: at above the I p O price, so eleven dollars 115 00:07:31,400 --> 00:07:35,200 Speaker 1: and fifty cents. So that's the structure, if you will. 116 00:07:35,640 --> 00:07:40,640 Speaker 1: The reason somebody might invest is because, uh, as you know, 117 00:07:40,680 --> 00:07:43,360 Speaker 1: in a traditional I p O it's very hard to 118 00:07:43,400 --> 00:07:46,440 Speaker 1: get an allocation in an I p O. So retail 119 00:07:46,520 --> 00:07:50,280 Speaker 1: investors can invest in a spack. The money raised in 120 00:07:50,320 --> 00:07:53,240 Speaker 1: that I p O goes into a trust. So there's 121 00:07:53,280 --> 00:07:58,240 Speaker 1: some downside for investors. The trust holds the cash until 122 00:07:58,760 --> 00:08:05,880 Speaker 1: the spack back with a merger acquisition and puts it 123 00:08:05,960 --> 00:08:10,560 Speaker 1: to the shareholders. That the shareholders don't like the acquisition, 124 00:08:10,600 --> 00:08:14,200 Speaker 1: they can uh, they can say I want my money back, 125 00:08:14,480 --> 00:08:16,720 Speaker 1: They can redeem their shares. Even if they vote for 126 00:08:16,720 --> 00:08:19,800 Speaker 1: the acquisition, they still have the ability to deem their shares, 127 00:08:20,360 --> 00:08:25,560 Speaker 1: so you can. Spact provides some downside up until the 128 00:08:25,600 --> 00:08:30,240 Speaker 1: time of the business combination. And you're right, Joe, that 129 00:08:30,240 --> 00:08:33,840 Speaker 1: that that you're kind of locking your money in for 130 00:08:33,880 --> 00:08:38,360 Speaker 1: a period of time until the SPAC sponsors find find 131 00:08:38,400 --> 00:08:44,479 Speaker 1: the right opportunity and present the acquisition merger to the shareholders. 132 00:08:45,400 --> 00:08:49,719 Speaker 1: You mentioned the initial sort of SPACK investors also get 133 00:08:49,760 --> 00:08:52,960 Speaker 1: a warrant, so a right to buy further shares of 134 00:08:52,960 --> 00:08:56,120 Speaker 1: the company at slightly above the offering price. Is that 135 00:08:56,240 --> 00:08:59,079 Speaker 1: sort of like a compensation for the sort of time 136 00:08:59,160 --> 00:09:02,640 Speaker 1: value of my of locking your money up while the 137 00:09:02,920 --> 00:09:06,800 Speaker 1: board or while the well the additional sponsors could spend 138 00:09:06,880 --> 00:09:09,600 Speaker 1: up to two years looking for a company. Yeah, and 139 00:09:09,679 --> 00:09:13,800 Speaker 1: that I think, as as you say, it gives um investors, 140 00:09:13,840 --> 00:09:17,120 Speaker 1: you know, more potential upside if the business that they 141 00:09:17,160 --> 00:09:20,360 Speaker 1: have acquired does well over the over the long run, 142 00:09:20,640 --> 00:09:41,160 Speaker 1: so they get a little more upside. So you mentioned 143 00:09:41,200 --> 00:09:44,040 Speaker 1: why investors might be interested in the structure. It gives 144 00:09:44,080 --> 00:09:47,000 Speaker 1: them companies that might be otherwise very difficult for them 145 00:09:47,040 --> 00:09:49,640 Speaker 1: to have access to, especially in an I p O 146 00:09:49,760 --> 00:09:53,240 Speaker 1: process where you know, the initial allotments are going to 147 00:09:53,360 --> 00:09:57,040 Speaker 1: go to very big investors like you know, mutual funds 148 00:09:57,240 --> 00:10:01,040 Speaker 1: UM And you mentioned the role of the sponsors, and 149 00:10:01,120 --> 00:10:05,680 Speaker 1: you know, sponsors get these sponsors shares and most of 150 00:10:05,679 --> 00:10:09,160 Speaker 1: them seem to be well compensated for their role in 151 00:10:09,200 --> 00:10:12,120 Speaker 1: these companies. But what's in it? What's in it for 152 00:10:12,160 --> 00:10:15,320 Speaker 1: a company that is being bought by a spack or 153 00:10:15,320 --> 00:10:18,839 Speaker 1: a company that is reverse merging into a spack, why 154 00:10:18,840 --> 00:10:21,240 Speaker 1: do they do it instead of doing an I p 155 00:10:21,400 --> 00:10:24,840 Speaker 1: O for instance. Well, that's a good question really for 156 00:10:24,880 --> 00:10:29,600 Speaker 1: the target business and its owners. One if you look 157 00:10:29,640 --> 00:10:32,160 Speaker 1: at today's market, it's the ability to go public during 158 00:10:32,200 --> 00:10:36,920 Speaker 1: periods of market instability, so you have access to public capital. 159 00:10:37,640 --> 00:10:39,960 Speaker 1: You can raise money to fund growth or raise money 160 00:10:39,960 --> 00:10:43,400 Speaker 1: to fund your operations, and you can do it with 161 00:10:43,520 --> 00:10:48,600 Speaker 1: much more certainty. So SPACs, once the spack identifies the 162 00:10:48,679 --> 00:10:51,920 Speaker 1: target and starts having negotiations with the target, it's a 163 00:10:51,960 --> 00:10:56,800 Speaker 1: negotiated deal. So the target business the business owners have 164 00:10:57,040 --> 00:11:02,840 Speaker 1: much more say in the str ructure of of the 165 00:11:03,160 --> 00:11:08,200 Speaker 1: company going forward, how much of their equity investment are 166 00:11:08,200 --> 00:11:11,440 Speaker 1: they willing to roll into the company, what's the price 167 00:11:11,679 --> 00:11:13,760 Speaker 1: so you know they usually in a traditional I p 168 00:11:13,880 --> 00:11:17,720 Speaker 1: O there's really no no ability to negotiate price. So 169 00:11:17,760 --> 00:11:20,160 Speaker 1: it's all a bit of a negotiation with a SPAC, 170 00:11:20,280 --> 00:11:23,800 Speaker 1: which can be very comforting to a company that's going 171 00:11:23,800 --> 00:11:28,000 Speaker 1: to go public, and the other sort of big benefit 172 00:11:28,160 --> 00:11:33,640 Speaker 1: for the target businesses. You can include financial projections which 173 00:11:33,640 --> 00:11:37,079 Speaker 1: you can't do in a traditional I p O. So 174 00:11:37,320 --> 00:11:42,040 Speaker 1: in the proxy statement that goes to the SPAC shareholders 175 00:11:42,120 --> 00:11:45,000 Speaker 1: to vote on the deal, whether they want to prove 176 00:11:45,040 --> 00:11:47,840 Speaker 1: the deal, whether they want to get their money back. Uh, 177 00:11:47,880 --> 00:11:53,400 Speaker 1: that can include financial projections and forward looking statements, which 178 00:11:53,520 --> 00:11:55,719 Speaker 1: is not allowed in a traditional I PO. So when 179 00:11:55,720 --> 00:11:58,559 Speaker 1: you look at some of the sort of larger if 180 00:11:58,559 --> 00:12:01,760 Speaker 1: you look at some virgin lactic or draftings, it gave 181 00:12:01,840 --> 00:12:05,680 Speaker 1: them the ability to show what the company is going 182 00:12:05,720 --> 00:12:08,599 Speaker 1: to look like or might look like over sort of 183 00:12:08,679 --> 00:12:11,560 Speaker 1: multi year projections. Right. So this is where I have 184 00:12:11,720 --> 00:12:14,199 Speaker 1: to like ask like a sort of like cynical question 185 00:12:14,280 --> 00:12:17,679 Speaker 1: because you say that you know, this is a volatile market, 186 00:12:18,040 --> 00:12:20,920 Speaker 1: and so SPACs offer another route to go in public. 187 00:12:21,000 --> 00:12:24,400 Speaker 1: But on the other hand, this is one some people 188 00:12:24,480 --> 00:12:26,280 Speaker 1: might say this is a volatile market. But another way 189 00:12:26,280 --> 00:12:28,120 Speaker 1: to say that is that this is a sort of 190 00:12:28,120 --> 00:12:31,640 Speaker 1: euphoric market and that if you're a company that was 191 00:12:31,679 --> 00:12:36,400 Speaker 1: in enterprise software or cloud software or autonomous vehicle tech, 192 00:12:36,720 --> 00:12:42,080 Speaker 1: there's extraordinary demand in this market um for equity issuance. 193 00:12:42,120 --> 00:12:47,720 Speaker 1: And so is it really about, Okay, this is a 194 00:12:47,720 --> 00:12:50,560 Speaker 1: path to the market in a market that maybe doesn't 195 00:12:50,559 --> 00:12:52,959 Speaker 1: have the appetite, or is it about there's a bunch 196 00:12:53,000 --> 00:12:56,800 Speaker 1: of people that are pouring money into speculative. That's a 197 00:12:56,880 --> 00:12:59,120 Speaker 1: lot of retail money in this market. I mean, that's 198 00:12:59,120 --> 00:13:02,200 Speaker 1: been one of the extraordinary stories of and if you like, 199 00:13:02,480 --> 00:13:04,560 Speaker 1: I want to like sort of tap some of that 200 00:13:04,760 --> 00:13:07,400 Speaker 1: retail money, and you want to be able to give 201 00:13:07,520 --> 00:13:10,720 Speaker 1: projections which you can't do in an s one UM 202 00:13:10,760 --> 00:13:13,360 Speaker 1: and say here's our hockey stick growth about you know, 203 00:13:13,440 --> 00:13:17,280 Speaker 1: our total addressable market for autonomous vehicle tech going out 204 00:13:17,320 --> 00:13:21,840 Speaker 1: to the year that this is sort of an easy 205 00:13:21,920 --> 00:13:27,560 Speaker 1: way to get um less sophisticated money. I actually think 206 00:13:27,559 --> 00:13:29,559 Speaker 1: it is a little bit of both. So I do 207 00:13:29,679 --> 00:13:31,960 Speaker 1: think when you look at the spack market right now. 208 00:13:32,000 --> 00:13:35,560 Speaker 1: I know Tracy mentioned the numbers which day to day 209 00:13:35,720 --> 00:13:39,840 Speaker 1: are are changing because there's so many specs. So I 210 00:13:39,840 --> 00:13:43,319 Speaker 1: think the numbers are now you know, over thirty billion 211 00:13:43,360 --> 00:13:46,920 Speaker 1: of capital raised by specs over seventy I p o 212 00:13:47,040 --> 00:13:50,360 Speaker 1: s by SPACs. That compares to thirteen point six billion 213 00:13:50,440 --> 00:13:54,120 Speaker 1: raised by fifty nine packs in ten And the average 214 00:13:54,160 --> 00:13:57,959 Speaker 1: size of SPACs has grown just since last year. So 215 00:13:58,360 --> 00:14:01,160 Speaker 1: I would say if you look at the numbers, particularly 216 00:14:01,280 --> 00:14:05,240 Speaker 1: in July and August, uh, it's not just a hot 217 00:14:05,280 --> 00:14:09,360 Speaker 1: market but arguably somewhat overheated. So there's been such a 218 00:14:09,360 --> 00:14:12,520 Speaker 1: flood of new SPACs on the market. And as you say, 219 00:14:13,040 --> 00:14:18,400 Speaker 1: looking for a lot, looking for technology place. So what 220 00:14:18,920 --> 00:14:23,120 Speaker 1: where is there going to be substantial growth? Uh? In 221 00:14:23,280 --> 00:14:26,680 Speaker 1: a private company that we can bring to the public market. 222 00:14:26,880 --> 00:14:30,560 Speaker 1: And and yes, the the investors in this back are 223 00:14:30,600 --> 00:14:35,320 Speaker 1: really betting on this SPAC management team, this back board 224 00:14:35,360 --> 00:14:39,760 Speaker 1: and management team to bring a high quality and in 225 00:14:39,800 --> 00:14:43,960 Speaker 1: most cases they're looking for a high growth company that 226 00:14:44,040 --> 00:14:47,760 Speaker 1: they can bring to market. Um to Joe's point, can 227 00:14:47,800 --> 00:14:50,880 Speaker 1: you talk a little bit more about the differences in 228 00:14:51,440 --> 00:14:56,160 Speaker 1: pricing or valuing companies in a SPACK structure versus a 229 00:14:56,240 --> 00:14:59,240 Speaker 1: traditional I p O process. So when I think of 230 00:14:59,280 --> 00:15:02,840 Speaker 1: an I p O, there's sort of this whole ecosystem 231 00:15:02,880 --> 00:15:07,120 Speaker 1: of people, you know, the underwriters, the potential investors. There's 232 00:15:07,760 --> 00:15:12,120 Speaker 1: consensus building around the valuation. As you mentioned, no one 233 00:15:12,160 --> 00:15:15,000 Speaker 1: really knows what it's going to be until it lists 234 00:15:15,040 --> 00:15:18,560 Speaker 1: and then it starts trading, and usually people are expecting 235 00:15:18,640 --> 00:15:21,840 Speaker 1: that first day pop and the criticism of that is 236 00:15:21,880 --> 00:15:24,640 Speaker 1: that it means that the company itself has left money 237 00:15:24,680 --> 00:15:28,160 Speaker 1: on the table. But the SPACK process is much more 238 00:15:28,880 --> 00:15:31,600 Speaker 1: certain again, as you pointed out, like you know what 239 00:15:31,720 --> 00:15:37,360 Speaker 1: the valuation is, but it's also much more confined. Um So, 240 00:15:37,400 --> 00:15:40,480 Speaker 1: I guess what I'm asking is is this stack structure 241 00:15:40,600 --> 00:15:45,320 Speaker 1: a way to for for companies to raise more money 242 00:15:45,320 --> 00:15:48,640 Speaker 1: than they would in the I p O process. Yes, 243 00:15:48,760 --> 00:15:56,160 Speaker 1: I think there's more opportunity to avoid that significant potential 244 00:15:56,280 --> 00:15:59,640 Speaker 1: underpricing than a traditional I p O, where where the 245 00:15:59,720 --> 00:16:04,760 Speaker 1: under writers and the larger investors are pricing in that 246 00:16:04,840 --> 00:16:08,480 Speaker 1: ability to pop. I think in the average in the 247 00:16:08,520 --> 00:16:12,600 Speaker 1: traditional I PO was like below market, and they are that. 248 00:16:12,720 --> 00:16:14,800 Speaker 1: I mean that's the way traditional I PO is set 249 00:16:14,880 --> 00:16:18,360 Speaker 1: up to see that big pop. Whereas here, I think, 250 00:16:18,400 --> 00:16:23,840 Speaker 1: particularly with the significant number of SPACs in the market 251 00:16:23,960 --> 00:16:27,120 Speaker 1: right now looking for targets, the targets are in a 252 00:16:27,160 --> 00:16:32,600 Speaker 1: better position to negotiate favorable terms and negotiate that price 253 00:16:32,680 --> 00:16:37,640 Speaker 1: so that they can maximize the amount of capital that 254 00:16:37,720 --> 00:16:42,160 Speaker 1: they can raise. And that I think is what we're 255 00:16:42,160 --> 00:16:45,200 Speaker 1: starting to see now in the spack market. I mean, 256 00:16:45,240 --> 00:16:48,560 Speaker 1: there's still thousands of targets, so there are lots of 257 00:16:48,600 --> 00:16:52,000 Speaker 1: companies out there, but they're definitely in a better position 258 00:16:52,160 --> 00:16:56,960 Speaker 1: to negotiate. I record somewhere that some of them are 259 00:16:57,080 --> 00:17:00,880 Speaker 1: even having these big calls back offs they bring several 260 00:17:00,920 --> 00:17:05,879 Speaker 1: SPACs in and that's sort of a you know, a 261 00:17:05,880 --> 00:17:09,159 Speaker 1: beauty contest if you will, Actually, can you clarify that? 262 00:17:09,280 --> 00:17:13,000 Speaker 1: So the private company chooses between specs, you know what 263 00:17:13,040 --> 00:17:16,280 Speaker 1: you're saying, No, I mean the SPAC goes out and 264 00:17:16,359 --> 00:17:20,239 Speaker 1: looks for for for a target. You're right, But what 265 00:17:20,280 --> 00:17:22,800 Speaker 1: I'm saying is what I've heard is I mean there's 266 00:17:22,800 --> 00:17:25,120 Speaker 1: so when you think about it, with all of the 267 00:17:25,160 --> 00:17:29,720 Speaker 1: SPACs right now looking for targets, you have to imagine 268 00:17:29,800 --> 00:17:32,640 Speaker 1: some of the high tech and you know, high growth 269 00:17:32,680 --> 00:17:39,320 Speaker 1: companies who might have gone through more mature financings and 270 00:17:39,359 --> 00:17:42,639 Speaker 1: are just about ready to, you know, thinking about going public, 271 00:17:42,680 --> 00:17:46,199 Speaker 1: and maybe you're thinking about aspact as as an alternative. 272 00:17:46,400 --> 00:17:50,480 Speaker 1: If they're getting calls from several SPACs, uh, they might 273 00:17:50,520 --> 00:17:52,600 Speaker 1: have the ability to say which one do they think 274 00:17:52,720 --> 00:17:54,440 Speaker 1: they want to go with and which one did they 275 00:17:54,480 --> 00:17:56,920 Speaker 1: think they can either get the best terms with or 276 00:17:56,960 --> 00:18:00,880 Speaker 1: will be a really solid partner. So this actually leads 277 00:18:00,880 --> 00:18:04,000 Speaker 1: into something I was wondering. So, you know, if a 278 00:18:04,000 --> 00:18:08,199 Speaker 1: company is getting lots of different approaches from lots of 279 00:18:08,240 --> 00:18:14,600 Speaker 1: different SPACs, are are all SPACs created equal? Or how 280 00:18:14,600 --> 00:18:18,359 Speaker 1: would they be choosing um which SPACK to partner with? 281 00:18:18,480 --> 00:18:21,160 Speaker 1: And I guess what I'm getting at. Is our SPACs 282 00:18:21,200 --> 00:18:25,399 Speaker 1: a sort of neutral vehicle to take companies public or 283 00:18:25,680 --> 00:18:30,440 Speaker 1: are they more about a business partnership with a sponsor? 284 00:18:31,320 --> 00:18:34,359 Speaker 1: That's an excellent question. I think they really are more 285 00:18:34,400 --> 00:18:38,639 Speaker 1: about a business partnership. So what does this back team 286 00:18:38,840 --> 00:18:42,440 Speaker 1: bring to them? So when I look at this back 287 00:18:43,000 --> 00:18:47,719 Speaker 1: huge an acquisition, our focus is predominantly the fintech and 288 00:18:47,880 --> 00:18:50,840 Speaker 1: asset wealth management area, and one of the reasons is 289 00:18:50,960 --> 00:18:54,080 Speaker 1: the SPAC team that we have that we put together 290 00:18:54,760 --> 00:19:01,919 Speaker 1: are all from that background. So we have financial experience, 291 00:19:01,960 --> 00:19:06,720 Speaker 1: we have investment experience, we have uh E, t F experience, 292 00:19:07,320 --> 00:19:12,600 Speaker 1: fintech experience. So so our focus and our expertise is 293 00:19:12,640 --> 00:19:15,119 Speaker 1: really in that space. And that's what we think we 294 00:19:15,960 --> 00:19:20,720 Speaker 1: as a fact team effusion acquisition bring to a potential target. 295 00:19:21,160 --> 00:19:26,200 Speaker 1: Is some of that uh in, some some main recognition, 296 00:19:26,640 --> 00:19:34,240 Speaker 1: some significant experience, some you know, perhaps more seasoned experience 297 00:19:34,400 --> 00:19:39,160 Speaker 1: in developing strategy and some new products. So that might 298 00:19:39,200 --> 00:19:43,360 Speaker 1: be attractive to up target to have some of that 299 00:19:43,800 --> 00:19:47,679 Speaker 1: seasoned experience come in. And and whether that's in the 300 00:19:47,720 --> 00:19:51,240 Speaker 1: form of being on the board or an advisor, helping 301 00:19:51,240 --> 00:19:58,520 Speaker 1: them with their strategy, really exploring their growth story, how 302 00:19:58,520 --> 00:20:02,679 Speaker 1: do you get paid so ultimately UM you know in theory. 303 00:20:02,800 --> 00:20:06,159 Speaker 1: You know Bill Gurley, the venture capitalist, he's been very 304 00:20:06,200 --> 00:20:08,960 Speaker 1: critical of the traditional I P O process for quite 305 00:20:09,000 --> 00:20:11,440 Speaker 1: some times, and he says, like SPACs are clearly better. 306 00:20:11,760 --> 00:20:16,120 Speaker 1: The company doesn't give up that big pop two investors. 307 00:20:16,160 --> 00:20:19,240 Speaker 1: This is like a real good avenue. And so my 308 00:20:19,359 --> 00:20:23,400 Speaker 1: question is, Okay, let's say I'm buying into your um 309 00:20:23,560 --> 00:20:26,920 Speaker 1: spack as an investor, and I'm trusting that you're going 310 00:20:27,000 --> 00:20:31,560 Speaker 1: to make a good acquisition, a good use of my 311 00:20:31,600 --> 00:20:35,800 Speaker 1: money what ultimately determines you and your other partners who 312 00:20:35,800 --> 00:20:38,560 Speaker 1: are involved in this back in terms of how much 313 00:20:38,800 --> 00:20:43,520 Speaker 1: UM you make. So the traditional spack when I mentioned 314 00:20:43,520 --> 00:20:48,480 Speaker 1: earlier founders shares, the traditional spac basically the founder shares 315 00:20:48,520 --> 00:20:52,600 Speaker 1: are purchased for a nominal amount and those founder shares 316 00:20:52,800 --> 00:20:56,639 Speaker 1: usually equate to about but with warrants equate to about 317 00:20:58,119 --> 00:21:02,639 Speaker 1: of the company being acquired to post the business combination. 318 00:21:03,240 --> 00:21:07,399 Speaker 1: So there's significant opportunity for this fact sponsors and the 319 00:21:07,520 --> 00:21:12,840 Speaker 1: directors and the management to make money of a company, 320 00:21:12,960 --> 00:21:17,320 Speaker 1: especially potential growth company in in you know when I 321 00:21:17,359 --> 00:21:20,719 Speaker 1: say short short term maybe you know in the sixth 322 00:21:21,080 --> 00:21:24,840 Speaker 1: one year term um and in the longer term as well. 323 00:21:24,960 --> 00:21:28,320 Speaker 1: So particularly with warrants, is there a minimum lock up? 324 00:21:28,680 --> 00:21:31,600 Speaker 1: So like, for example, I'm looking at the chart of 325 00:21:31,680 --> 00:21:36,200 Speaker 1: Nicolodge that's very sort of infamous or popular electric truck maker. 326 00:21:36,320 --> 00:21:39,320 Speaker 1: They had a thirty six thousand UM dollars in total 327 00:21:39,359 --> 00:21:42,919 Speaker 1: revenue last quarter market cap of about fourteen billions. So 328 00:21:43,520 --> 00:21:46,640 Speaker 1: there's another debate somewhere else about that valuation. But that's 329 00:21:46,680 --> 00:21:50,720 Speaker 1: not the point. My question is whoever did that spack? 330 00:21:50,880 --> 00:21:54,280 Speaker 1: Whoever found that company and brought them public? Are they 331 00:21:54,280 --> 00:21:58,480 Speaker 1: in a position most likely to instantly be able to 332 00:21:58,520 --> 00:22:00,840 Speaker 1: cash in or do they have to? Are they locked 333 00:22:00,920 --> 00:22:03,480 Speaker 1: up for a while such that ultimately, if this just 334 00:22:03,520 --> 00:22:05,560 Speaker 1: turns out to be a temporary pop and the company 335 00:22:05,600 --> 00:22:08,640 Speaker 1: does not turn into the next Tesla, uh, they don't 336 00:22:08,640 --> 00:22:13,840 Speaker 1: get paid. Yeah, they're there, typical and it's all sort 337 00:22:13,840 --> 00:22:17,600 Speaker 1: of negotiated in the structure. In in in the original structure, 338 00:22:17,760 --> 00:22:20,280 Speaker 1: but there are typical lock ups, and some of the 339 00:22:20,440 --> 00:22:25,240 Speaker 1: terms are changing. When I mentioned of a company, when 340 00:22:25,280 --> 00:22:30,080 Speaker 1: you look at uh Akman's Pershing square Ton team, which 341 00:22:30,160 --> 00:22:33,480 Speaker 1: was the biggest It's back I p O so far 342 00:22:34,040 --> 00:22:39,800 Speaker 1: he raised, Um, I think I mean four billions? Did 343 00:22:39,800 --> 00:22:43,040 Speaker 1: I say forty? I'm sorry, yeah, I was like, whoa, 344 00:22:43,119 --> 00:22:46,800 Speaker 1: I was completely off four billion. No, No, that would 345 00:22:46,840 --> 00:22:49,479 Speaker 1: be hard when only thirty billion has been raised in total. 346 00:22:49,520 --> 00:22:53,560 Speaker 1: But it's four billion. Um. What's fascinating about what he 347 00:22:53,640 --> 00:22:58,280 Speaker 1: did in his It's Back is he did not put 348 00:22:58,280 --> 00:23:01,520 Speaker 1: in founder shares. That this is what I understand. So 349 00:23:01,800 --> 00:23:06,000 Speaker 1: instead of founder shares, the sponsors and directors purchased warrants 350 00:23:06,040 --> 00:23:09,679 Speaker 1: and they're exercisable. I believe it's that three years after 351 00:23:09,720 --> 00:23:12,520 Speaker 1: the business combination, for about six percent of the equity 352 00:23:12,560 --> 00:23:15,920 Speaker 1: of the combined business. And I think that exercise prices 353 00:23:15,960 --> 00:23:19,240 Speaker 1: at about above the I p O price. So, as 354 00:23:19,240 --> 00:23:25,360 Speaker 1: I mentioned, you know, the traditional structure was of equity 355 00:23:25,840 --> 00:23:29,280 Speaker 1: with with the warrants, and now we're seeing, you know, 356 00:23:29,440 --> 00:23:34,040 Speaker 1: changes to that structure, and I think we'll continue to 357 00:23:34,040 --> 00:23:39,399 Speaker 1: see changes to the structure, particularly if the number of 358 00:23:39,680 --> 00:23:43,199 Speaker 1: back I p o s continues to grow. Uh and 359 00:23:43,400 --> 00:23:47,359 Speaker 1: the universe of targets, you know, was looking for a 360 00:23:47,440 --> 00:23:50,919 Speaker 1: spack that maybe wants to be in you know, in 361 00:23:51,000 --> 00:23:54,520 Speaker 1: it for the long run or um you know, take 362 00:23:54,640 --> 00:23:59,400 Speaker 1: less less of the equity off the table. So the 363 00:23:59,440 --> 00:24:03,879 Speaker 1: criticism some of the sponsor shares was that the sponsors 364 00:24:03,960 --> 00:24:07,400 Speaker 1: kind of get them up front, and because they immediately 365 00:24:07,640 --> 00:24:12,440 Speaker 1: get of this company, they they have a reduced incentive 366 00:24:12,600 --> 00:24:14,600 Speaker 1: I guess to go out and spend a lot of 367 00:24:14,640 --> 00:24:18,679 Speaker 1: time finding a quality business like they've already been paid. 368 00:24:18,840 --> 00:24:23,119 Speaker 1: So Akman's innovation is that you get rid of the 369 00:24:23,160 --> 00:24:28,880 Speaker 1: founder shares, you keep the incentives aligned with the investors. 370 00:24:29,880 --> 00:24:32,840 Speaker 1: Is that right? I think that's right. I mean, I 371 00:24:33,800 --> 00:24:36,919 Speaker 1: hear that criticism, but when I think about our spec 372 00:24:37,240 --> 00:24:41,000 Speaker 1: this is we are rookies in this back market our team, 373 00:24:41,600 --> 00:24:46,840 Speaker 1: and we have solid reputations. As I said, we're you know, 374 00:24:46,880 --> 00:24:50,880 Speaker 1: all decent executives, and so for us, it's about our 375 00:24:50,880 --> 00:24:54,520 Speaker 1: reputation as much as it is you know, to to 376 00:24:54,560 --> 00:24:58,240 Speaker 1: see if we can um benefit from this in the 377 00:24:58,320 --> 00:25:01,359 Speaker 1: long run financially. So we want to we want to 378 00:25:01,359 --> 00:25:03,960 Speaker 1: get a really good spack deal. We want to want 379 00:25:03,960 --> 00:25:05,720 Speaker 1: to do a good deal. And I don't think most 380 00:25:05,720 --> 00:25:09,000 Speaker 1: SPACs are out to find, you know, sort of a 381 00:25:09,040 --> 00:25:11,040 Speaker 1: paltry jill just to try and make money in the 382 00:25:11,640 --> 00:25:13,919 Speaker 1: short term. I could be wrong about that. I mean, 383 00:25:13,920 --> 00:25:16,320 Speaker 1: there are so many out there, but when I look 384 00:25:16,320 --> 00:25:18,439 Speaker 1: at it, I think, well, it's really important for us 385 00:25:18,440 --> 00:25:22,480 Speaker 1: to get a quality deal. So there's been a lot 386 00:25:22,480 --> 00:25:26,520 Speaker 1: of spacts obviously. And what's interesting is that in addition 387 00:25:26,600 --> 00:25:29,360 Speaker 1: to sort of season, dealmakers and financial types were also 388 00:25:29,359 --> 00:25:33,359 Speaker 1: seeing the rise of sort of PLAUSI celebrity SPACs. Billy Bean, 389 00:25:33,560 --> 00:25:37,840 Speaker 1: who was profiled in Moneyball, is doing a SPAC. Former 390 00:25:37,880 --> 00:25:42,920 Speaker 1: Speaker of the House Paul Ryan is doing a back um. 391 00:25:43,040 --> 00:25:46,359 Speaker 1: When you go out and you are trying to raise money, 392 00:25:46,400 --> 00:25:50,520 Speaker 1: what's the pitch? What is the why should uh? What? 393 00:25:50,800 --> 00:25:52,879 Speaker 1: You know? This sort of typical you know, if you're 394 00:25:52,920 --> 00:25:55,800 Speaker 1: not acman, if you're not a household name, how do 395 00:25:55,880 --> 00:25:58,480 Speaker 1: you pitch yourselves and say, you know, give your ten 396 00:25:58,520 --> 00:26:00,920 Speaker 1: dollars a share to us? As opposed to the hundreds 397 00:26:00,920 --> 00:26:05,159 Speaker 1: of other facts available out there for Fusion acquisition, we 398 00:26:05,240 --> 00:26:07,919 Speaker 1: really look at our team. We think we have a 399 00:26:07,960 --> 00:26:13,359 Speaker 1: strong team. We have experienced management. Our management board team 400 00:26:13,400 --> 00:26:17,320 Speaker 1: has as they mentioned, financial services, fintech, asset management. We 401 00:26:17,359 --> 00:26:22,440 Speaker 1: have m and a experience, product, innovation, operational expertise. So 402 00:26:22,760 --> 00:26:26,439 Speaker 1: we think we can be a good partner to a 403 00:26:26,720 --> 00:26:30,240 Speaker 1: potential target. So and I think that comes out we 404 00:26:30,240 --> 00:26:32,960 Speaker 1: we are obviously in the in the process now looking 405 00:26:32,960 --> 00:26:34,600 Speaker 1: for a target, and so we've been talking to the 406 00:26:34,680 --> 00:26:38,840 Speaker 1: several companies. I think that comes out in the dialogue 407 00:26:38,840 --> 00:26:41,480 Speaker 1: that we have with the companies. It's sort of like 408 00:26:41,520 --> 00:26:43,800 Speaker 1: a dance, you know, uh, is this going to be 409 00:26:43,840 --> 00:26:46,600 Speaker 1: a good fit for both sides or do we think 410 00:26:46,600 --> 00:26:51,720 Speaker 1: we're finding a quality team with a proven business model 411 00:26:52,400 --> 00:26:55,360 Speaker 1: And we're looking, you know, obviously for a very strong 412 00:26:56,840 --> 00:26:59,560 Speaker 1: existing company. We you know, we want a strong team 413 00:26:59,600 --> 00:27:03,440 Speaker 1: that that has um the ability to grow, but has 414 00:27:03,960 --> 00:27:07,760 Speaker 1: proven some of their their you know, their business model 415 00:27:07,800 --> 00:27:13,160 Speaker 1: and strategy. So we think we bring perhaps some seasoned 416 00:27:13,240 --> 00:27:17,000 Speaker 1: experience and expertise to that management team, and that comes 417 00:27:17,000 --> 00:27:19,320 Speaker 1: out in the dialogues and the due diligence we do 418 00:27:19,400 --> 00:27:22,320 Speaker 1: and the questions that we ask. And I think that's 419 00:27:22,359 --> 00:27:26,640 Speaker 1: where you hopefully will be successful in that dance. Now 420 00:27:26,680 --> 00:27:30,120 Speaker 1: when you when you look at some of the more 421 00:27:30,160 --> 00:27:35,240 Speaker 1: well known SPAC sponsors, um you see in the past 422 00:27:35,280 --> 00:27:40,159 Speaker 1: there have been several huge sponsors with big home runs. 423 00:27:40,200 --> 00:27:43,120 Speaker 1: But you know, not with with the amount of SPACs 424 00:27:43,160 --> 00:27:44,960 Speaker 1: that are out in the market right now, not everyone's 425 00:27:44,960 --> 00:27:48,280 Speaker 1: going to be at home one. And I think in 426 00:27:48,320 --> 00:27:54,359 Speaker 1: the end, UH investors might benefit from singles and doubles. 427 00:27:54,440 --> 00:28:00,159 Speaker 1: And that's where maybe you ask Billy being about you know, 428 00:28:00,680 --> 00:28:03,920 Speaker 1: in this entire conversation, I keep thinking, I keep thinking 429 00:28:03,920 --> 00:28:06,240 Speaker 1: back to venture capital. So you know, we're talking a 430 00:28:06,240 --> 00:28:09,200 Speaker 1: lot about the importance of the quality of the sponsors 431 00:28:09,240 --> 00:28:12,320 Speaker 1: of the management team, what the sponsors can bring to 432 00:28:12,359 --> 00:28:16,560 Speaker 1: the table for both investors and the company itself. And 433 00:28:16,640 --> 00:28:20,880 Speaker 1: to me, it sounds a lot like the venture capital model, 434 00:28:21,000 --> 00:28:23,640 Speaker 1: you know, where the venture capitalists kind of go out 435 00:28:23,720 --> 00:28:27,240 Speaker 1: to Silicon Valley and they have these lengthy conversations about 436 00:28:27,320 --> 00:28:30,160 Speaker 1: making investments in these up and coming tech firms, and 437 00:28:30,440 --> 00:28:35,280 Speaker 1: they're all sort of fighting for the same targets. Why 438 00:28:35,440 --> 00:28:39,280 Speaker 1: why start us back as opposed to just set up 439 00:28:39,120 --> 00:28:43,160 Speaker 1: a venture capital firm and invest that way. I guess 440 00:28:43,160 --> 00:28:47,640 Speaker 1: back is really more of a late stage venture cap financing, 441 00:28:47,720 --> 00:28:51,520 Speaker 1: so so you know, you're not getting in at the 442 00:28:51,600 --> 00:28:55,640 Speaker 1: earliest stages, but you're getting in when the company might 443 00:28:55,680 --> 00:28:58,400 Speaker 1: be ready to go public. And that's what you're really 444 00:28:58,440 --> 00:29:01,880 Speaker 1: looking for is somebody who's sort of at the late 445 00:29:01,960 --> 00:29:06,600 Speaker 1: stage venture venture financing, who who need who's looking for 446 00:29:06,760 --> 00:29:12,360 Speaker 1: the benefits of going public and having access to liquidity 447 00:29:12,480 --> 00:29:16,760 Speaker 1: and and and public capital, And so that's really it's 448 00:29:16,960 --> 00:29:20,680 Speaker 1: you know, kind of replacing, if you will, or or 449 00:29:20,720 --> 00:29:24,440 Speaker 1: competing with late stage venture financing, but in a way 450 00:29:24,480 --> 00:29:28,040 Speaker 1: to go public that's a little different from a traditional 451 00:29:28,040 --> 00:29:43,960 Speaker 1: I P O H. I guess that I'm still like 452 00:29:44,080 --> 00:29:48,200 Speaker 1: sort of bothered by the question, and I think it 453 00:29:48,280 --> 00:29:52,800 Speaker 1: sort of comes back to why SPACs historically have been 454 00:29:52,880 --> 00:29:58,120 Speaker 1: associated with market peaks, and why they've historically been associated 455 00:29:58,120 --> 00:30:01,440 Speaker 1: with speculative manias, and why why people are just sort 456 00:30:01,440 --> 00:30:05,440 Speaker 1: of distrustful of them overall. And I feel like, you know, 457 00:30:05,760 --> 00:30:09,000 Speaker 1: late stage venture exists, but in late stage I mean 458 00:30:09,160 --> 00:30:11,960 Speaker 1: that already is a class. So like late stage venture exists, 459 00:30:12,160 --> 00:30:14,880 Speaker 1: and you have you raise a pool of funds and 460 00:30:14,920 --> 00:30:18,080 Speaker 1: then you buy stakes at a bunch of different companies 461 00:30:18,080 --> 00:30:20,720 Speaker 1: and maybe a good handful of them work out because 462 00:30:20,720 --> 00:30:23,280 Speaker 1: it's late stage, and then you get paid on the results. 463 00:30:23,920 --> 00:30:27,800 Speaker 1: It still feels like this is a financing vehicle that 464 00:30:27,880 --> 00:30:32,120 Speaker 1: could really only exist when there's lots of end retail 465 00:30:32,640 --> 00:30:36,440 Speaker 1: money demand. People who can't invest put their money as 466 00:30:36,440 --> 00:30:39,520 Speaker 1: an LP in the venture capital fund, people who can't 467 00:30:39,640 --> 00:30:43,360 Speaker 1: get access to preferential allocation in an I p O. 468 00:30:43,520 --> 00:30:46,040 Speaker 1: So it feels like it has to be during a 469 00:30:46,080 --> 00:30:48,719 Speaker 1: period in which there's a lot of sort of retail 470 00:30:48,760 --> 00:30:52,320 Speaker 1: speculative money out there. And it seems like unlike with 471 00:30:52,440 --> 00:30:56,240 Speaker 1: a venture fund, and a venture fund theoretically only can 472 00:30:56,280 --> 00:30:59,040 Speaker 1: make money if there are some like mega winners. You 473 00:30:59,080 --> 00:31:02,800 Speaker 1: could theoretic you, due to the founder shares, get it 474 00:31:03,440 --> 00:31:06,080 Speaker 1: do well just by doing okay, and then you get 475 00:31:06,120 --> 00:31:08,760 Speaker 1: your and maybe it's not a home run, but you 476 00:31:08,760 --> 00:31:12,480 Speaker 1: could still make money. So why is this not just 477 00:31:12,560 --> 00:31:16,480 Speaker 1: something that is like strictly a a sort of a 478 00:31:16,640 --> 00:31:22,360 Speaker 1: market top phenomenon to feed the speculative demands of retail buyers. 479 00:31:23,440 --> 00:31:29,440 Speaker 1: It's interesting, but retail buyers are are relatively new to SPACs. 480 00:31:30,160 --> 00:31:35,040 Speaker 1: So most of the traditional fact investors are your large 481 00:31:35,040 --> 00:31:38,320 Speaker 1: investors and um. Some of that I think is opened 482 00:31:38,400 --> 00:31:42,680 Speaker 1: up to not just you know, highly speculative investors, but 483 00:31:43,160 --> 00:31:48,440 Speaker 1: large investors, but institutional investors that might be pension type 484 00:31:48,440 --> 00:31:51,920 Speaker 1: funds or uh, you know, sort of as I said, 485 00:31:52,080 --> 00:31:56,520 Speaker 1: large institutional funds so and mutual funds. So. So there 486 00:31:56,560 --> 00:32:03,160 Speaker 1: are predominantly those types of investors financing these facts. A 487 00:32:03,240 --> 00:32:10,840 Speaker 1: retail has been on, it has been increasing and um, 488 00:32:10,880 --> 00:32:14,200 Speaker 1: and so I would say there's definitely some retail speculation 489 00:32:14,280 --> 00:32:18,440 Speaker 1: going on, but it's certainly not the they are not 490 00:32:18,520 --> 00:32:21,920 Speaker 1: the largest investors. They're not what's really driving the investment 491 00:32:23,160 --> 00:32:26,440 Speaker 1: that you know, the significant investments is back, although they 492 00:32:26,480 --> 00:32:32,520 Speaker 1: are the retail market investments have increased. So your stack 493 00:32:33,280 --> 00:32:38,320 Speaker 1: fusion acquisition is uh, it's already trading under the ticker views. 494 00:32:39,240 --> 00:32:42,640 Speaker 1: What have you, um, what have you learned so far 495 00:32:42,840 --> 00:32:46,400 Speaker 1: from the stack experience or what has surprised you in 496 00:32:46,480 --> 00:32:50,360 Speaker 1: this fact process. So one of the things I've I've 497 00:32:50,480 --> 00:32:53,720 Speaker 1: learned which is actually pretty basic and it's fact. But 498 00:32:54,840 --> 00:32:57,880 Speaker 1: I mentioned before that the shareholders have the ability to redeem, 499 00:32:57,960 --> 00:33:01,760 Speaker 1: and I think it's important to hit on this topic. 500 00:33:01,800 --> 00:33:05,760 Speaker 1: But when the SPAC is going through what they call 501 00:33:05,840 --> 00:33:08,760 Speaker 1: the de SPAC process, so when they've found a target, 502 00:33:09,080 --> 00:33:14,400 Speaker 1: they've negotiated a transaction, and now they have to put 503 00:33:14,400 --> 00:33:18,680 Speaker 1: it to investors, and some of the investors, including institutional investors, UH, 504 00:33:18,720 --> 00:33:21,440 Speaker 1: if they see you know, a bit of a pop 505 00:33:21,520 --> 00:33:24,840 Speaker 1: on the announcement, they might want, you know, to redeem 506 00:33:24,880 --> 00:33:28,040 Speaker 1: their shares and take the money now for whatever reason, 507 00:33:28,120 --> 00:33:32,640 Speaker 1: or they might not like the deal. So to mitigate 508 00:33:32,720 --> 00:33:35,880 Speaker 1: the risk of a lot of money coming out, the 509 00:33:36,120 --> 00:33:40,080 Speaker 1: SPACs typically enter into an additional financing arrangement for that 510 00:33:40,200 --> 00:33:45,200 Speaker 1: despact transaction, and that's usually done through what's called a PIPE, 511 00:33:45,200 --> 00:33:49,880 Speaker 1: a private investment in public equity. So during that process, 512 00:33:49,960 --> 00:33:52,120 Speaker 1: what I've come to realize, and we're not at that 513 00:33:52,160 --> 00:33:55,719 Speaker 1: process yet, but i've been you know, UM learning about it, 514 00:33:55,800 --> 00:33:59,560 Speaker 1: is that the spact sponsors, you know, negotiate with the 515 00:33:59,600 --> 00:34:04,240 Speaker 1: PIPE investors so that that there is this backstop if 516 00:34:04,280 --> 00:34:09,480 Speaker 1: you will, to fund significant redemptions if they're significant redemptions, 517 00:34:09,880 --> 00:34:13,880 Speaker 1: and that's another opportunity where the SPAC sponsors might have 518 00:34:14,040 --> 00:34:18,240 Speaker 1: to UM negotiate to give some of their founder shares 519 00:34:18,480 --> 00:34:23,200 Speaker 1: to attract the investors provide PIPE, so they're there throughout 520 00:34:23,280 --> 00:34:28,680 Speaker 1: this SPAC process. There are these different opportunities for negotiations. 521 00:34:28,680 --> 00:34:32,040 Speaker 1: So certainly in the beginning UM trying to get investors 522 00:34:32,120 --> 00:34:34,480 Speaker 1: to come in, and when you do your road shows, 523 00:34:34,840 --> 00:34:37,160 Speaker 1: you definitely get a sense of what the investors are 524 00:34:37,200 --> 00:34:43,440 Speaker 1: looking for. Then there's the agreement with the negotiations with 525 00:34:43,480 --> 00:34:48,400 Speaker 1: this fact target as well as the potential negotiations with 526 00:34:48,560 --> 00:34:51,919 Speaker 1: a PIPE financing. And when you think about these facts 527 00:34:52,320 --> 00:34:55,719 Speaker 1: we raised Fusion acquisition, we raised three fifty million, but 528 00:34:56,040 --> 00:34:59,840 Speaker 1: you're typically looking for something three, four or five times 529 00:35:00,400 --> 00:35:04,879 Speaker 1: the size of your SPACK to acquire and that that 530 00:35:05,520 --> 00:35:09,200 Speaker 1: helps reduce any of the delustion of the founders shares, 531 00:35:09,280 --> 00:35:13,560 Speaker 1: the founders warrants UM. So that's one thing I've I've learned, 532 00:35:13,640 --> 00:35:16,400 Speaker 1: and the other thing I've learned it's just really exciting. 533 00:35:16,440 --> 00:35:19,360 Speaker 1: I know, the market is kind of crazy at the moment, 534 00:35:19,440 --> 00:35:24,280 Speaker 1: but it's exciting to go through the process of talking 535 00:35:24,280 --> 00:35:29,799 Speaker 1: to companies looking at potential acquisitions. And this goes back 536 00:35:29,840 --> 00:35:33,120 Speaker 1: to some of my experience when I was at State Street. 537 00:35:33,320 --> 00:35:37,600 Speaker 1: Is really it's fun to look at opportunities and really 538 00:35:39,320 --> 00:35:44,920 Speaker 1: try and select a good partner and trying to complete 539 00:35:44,920 --> 00:35:48,000 Speaker 1: a quality deal. And it's it's as I said, they're 540 00:35:48,000 --> 00:35:49,920 Speaker 1: not all going to be home runs, but it's really 541 00:35:49,960 --> 00:35:55,120 Speaker 1: exciting to be in that process. If I were an 542 00:35:55,120 --> 00:35:58,759 Speaker 1: investor in a spack and I would hope that the 543 00:35:58,880 --> 00:36:02,799 Speaker 1: management team really looking out for sort of you know, 544 00:36:02,920 --> 00:36:07,080 Speaker 1: really doing uh serious process and as you describe, to 545 00:36:07,200 --> 00:36:10,399 Speaker 1: find a quality deal. But at the same time, right 546 00:36:10,440 --> 00:36:14,279 Speaker 1: now we just see you know, this incredible enthusiasm for say, 547 00:36:14,320 --> 00:36:18,000 Speaker 1: like anything that's related to electric vehicles or autonomous vehicles. 548 00:36:18,719 --> 00:36:24,040 Speaker 1: How does the sponsor team not just sort of, um 549 00:36:24,200 --> 00:36:26,000 Speaker 1: pick something that's hot, Like if they if I were 550 00:36:26,040 --> 00:36:29,799 Speaker 1: to find some company that find some company that had 551 00:36:29,880 --> 00:36:32,520 Speaker 1: some sort of laser tech that could identify other cars 552 00:36:32,560 --> 00:36:34,360 Speaker 1: on the roads, like, oh yeah, this is this is 553 00:36:34,440 --> 00:36:37,560 Speaker 1: autonomous vehicle tech. Autonomous vehicles hot right now, this will 554 00:36:37,560 --> 00:36:40,799 Speaker 1: get a pop. Um. How do they weigh the sort 555 00:36:40,800 --> 00:36:45,880 Speaker 1: of near term thirst for the market versus actually finding 556 00:36:46,000 --> 00:36:50,239 Speaker 1: something that this could be a big sustainable company with 557 00:36:50,320 --> 00:36:54,359 Speaker 1: long term potential. Well, on your car analogy, I think 558 00:36:54,400 --> 00:36:57,920 Speaker 1: you really have to kick the tires for sure, um, 559 00:36:57,960 --> 00:37:02,960 Speaker 1: And that's really critical is to do your due diligence 560 00:37:03,200 --> 00:37:08,640 Speaker 1: and get a feel for management and test their their 561 00:37:09,280 --> 00:37:13,880 Speaker 1: strategy and their business model and see where they have 562 00:37:14,040 --> 00:37:17,239 Speaker 1: been what they have proven so far, because you're not 563 00:37:17,400 --> 00:37:20,480 Speaker 1: in so early they actually have you know, you're looking 564 00:37:20,480 --> 00:37:26,120 Speaker 1: for companies that have a proven business model, so you 565 00:37:26,200 --> 00:37:28,880 Speaker 1: really have to do that, and you count on some 566 00:37:28,960 --> 00:37:32,279 Speaker 1: of your advisers to help with that process. But I 567 00:37:32,280 --> 00:37:35,520 Speaker 1: think it really comes down to looking for a company 568 00:37:35,520 --> 00:37:39,040 Speaker 1: that in the in the long run, is going to 569 00:37:39,080 --> 00:37:44,279 Speaker 1: be able to implement its strategy, have the flexibility to 570 00:37:44,400 --> 00:37:48,680 Speaker 1: adapt and pivot when it needs to, and have you know, 571 00:37:49,200 --> 00:37:54,799 Speaker 1: proven their capabilities in at least a short run. But 572 00:37:54,880 --> 00:37:57,800 Speaker 1: if I were, if I were a sort of owner 573 00:37:57,880 --> 00:38:01,360 Speaker 1: of the ten dollar spec shares, how would I feel 574 00:38:01,400 --> 00:38:05,440 Speaker 1: confident that the sponsor management team is actually going to 575 00:38:05,560 --> 00:38:08,799 Speaker 1: do the process you described kick the tires, really get 576 00:38:08,840 --> 00:38:12,720 Speaker 1: to know the business model as opposed to just finding 577 00:38:12,840 --> 00:38:15,520 Speaker 1: some flavor of the month that has a high chance 578 00:38:15,760 --> 00:38:19,040 Speaker 1: of UM having a stock market pop when it's announce 579 00:38:20,320 --> 00:38:23,760 Speaker 1: I think for the investor, it's really important to look 580 00:38:23,880 --> 00:38:28,840 Speaker 1: at that sponsor and their team and understand what experience 581 00:38:28,880 --> 00:38:30,960 Speaker 1: do they have, what do they bring to the table. 582 00:38:31,400 --> 00:38:34,760 Speaker 1: Have they done this before, and maybe not through aspect structure, 583 00:38:34,800 --> 00:38:37,920 Speaker 1: but have they been involved in valuing companies? Have they 584 00:38:37,960 --> 00:38:45,160 Speaker 1: been involved in and venture cap in the particular H 585 00:38:45,320 --> 00:38:48,640 Speaker 1: industry that you're looking at. Have they been as you mentioned, 586 00:38:48,680 --> 00:38:50,960 Speaker 1: have they been involved in the car business. Have they 587 00:38:51,000 --> 00:38:57,600 Speaker 1: been involved in technology innovation? So that's that's incredibly important 588 00:38:57,600 --> 00:39:00,960 Speaker 1: for the investor who's investing in this back is to 589 00:39:01,440 --> 00:39:04,200 Speaker 1: do their due diligence on this back team and make 590 00:39:04,239 --> 00:39:07,239 Speaker 1: sure they understand what they're trying to accomplish and what 591 00:39:07,239 --> 00:39:11,680 Speaker 1: what they bring to the table. I have a really 592 00:39:12,560 --> 00:39:17,080 Speaker 1: really cynical question, um. And you know, I'm sorry because 593 00:39:17,120 --> 00:39:20,399 Speaker 1: like many of these questions have been really cynical. Um, 594 00:39:20,440 --> 00:39:22,200 Speaker 1: and I'm probably going to take it to a new 595 00:39:22,239 --> 00:39:26,440 Speaker 1: level here. But if someone invests in a spack and 596 00:39:26,440 --> 00:39:31,200 Speaker 1: and it all goes wrong, um, because management makes a 597 00:39:31,280 --> 00:39:35,040 Speaker 1: bad investment decision, or you know, say they invest in 598 00:39:35,120 --> 00:39:38,480 Speaker 1: a company that was cooking its books in some way 599 00:39:38,560 --> 00:39:41,000 Speaker 1: or another and they didn't perform the proper due diligence 600 00:39:41,040 --> 00:39:45,839 Speaker 1: that they should have. What recourse do investors have in 601 00:39:45,880 --> 00:39:51,280 Speaker 1: that situation and what protection do the sponsors have legally 602 00:39:51,480 --> 00:39:57,120 Speaker 1: for those kind of disputes, I think in in those 603 00:39:57,160 --> 00:40:01,359 Speaker 1: types of disputes after this back has been completed, So 604 00:40:01,400 --> 00:40:05,080 Speaker 1: after the business combination has completed, you're really looking at 605 00:40:05,239 --> 00:40:11,240 Speaker 1: the typical shareholder rights that that might come into play 606 00:40:12,239 --> 00:40:16,800 Speaker 1: before this back combination is completed. Because you know, fraud 607 00:40:16,880 --> 00:40:21,080 Speaker 1: happens and companies cook their books, so you know, it's 608 00:40:21,120 --> 00:40:25,960 Speaker 1: it's sometimes incredibly hard to uncover that in even the 609 00:40:25,960 --> 00:40:30,279 Speaker 1: most thorough due diligence. So the there, you know, will 610 00:40:30,320 --> 00:40:34,440 Speaker 1: be those situations you'll see when something really bad happens, 611 00:40:34,800 --> 00:40:37,600 Speaker 1: as in any investment that you might make in the 612 00:40:37,680 --> 00:40:41,000 Speaker 1: in the in the public markets. So you have the 613 00:40:41,160 --> 00:40:45,760 Speaker 1: shareholder rights that that you would see in any publicly 614 00:40:45,800 --> 00:40:48,960 Speaker 1: traded equity that's listed you know, on the in the 615 00:40:49,000 --> 00:40:52,279 Speaker 1: at least in the US, it's listed on the exchanges. 616 00:40:52,440 --> 00:40:57,360 Speaker 1: The SEC protections if you will, for for protecting against 617 00:40:58,160 --> 00:41:05,239 Speaker 1: investors against fraud. But going into the business combination, if 618 00:41:05,280 --> 00:41:09,160 Speaker 1: you're not keen on the company that that is being 619 00:41:09,200 --> 00:41:14,759 Speaker 1: presented um and again you at least have more kind 620 00:41:14,760 --> 00:41:19,359 Speaker 1: of more but certainly significant amount of disclosure that's being 621 00:41:19,400 --> 00:41:24,239 Speaker 1: provided to you, you can you can take your money back, 622 00:41:24,360 --> 00:41:28,080 Speaker 1: you know, so you can get the the the cash 623 00:41:28,200 --> 00:41:30,600 Speaker 1: your proportion of the cash that's held on that trust. 624 00:41:31,120 --> 00:41:34,000 Speaker 1: But after after the deal is done, it's really just 625 00:41:34,080 --> 00:41:39,200 Speaker 1: like any other publicly traded equity. What's what's the next 626 00:41:39,280 --> 00:41:42,439 Speaker 1: big thing in SPACs? So you know, we've been talking 627 00:41:42,440 --> 00:41:46,680 Speaker 1: about how SPACs are already the big thing in markets 628 00:41:46,680 --> 00:41:49,560 Speaker 1: at the moment, But what's the next iteration of the 629 00:41:49,600 --> 00:41:52,279 Speaker 1: spack or the next trend that you see coming up? 630 00:41:53,680 --> 00:41:56,080 Speaker 1: I think it'll be fascinating to see how we get 631 00:41:56,120 --> 00:41:59,239 Speaker 1: through this incredibly hot market. So what what's going to 632 00:41:59,280 --> 00:42:03,360 Speaker 1: resolve come out of you know, all of these facts 633 00:42:03,440 --> 00:42:05,719 Speaker 1: that are in the market right now looking for targets. 634 00:42:05,719 --> 00:42:07,799 Speaker 1: So how will that all play out? I think that's 635 00:42:07,840 --> 00:42:10,560 Speaker 1: really going to be interesting to see. And there's still 636 00:42:10,800 --> 00:42:14,000 Speaker 1: more spacts being listed, you know, every day right now, 637 00:42:14,080 --> 00:42:18,440 Speaker 1: so so it hasn't cooled off quite yet, so what 638 00:42:18,440 --> 00:42:21,360 Speaker 1: what will you know? We haven't seen a spack market 639 00:42:21,440 --> 00:42:24,160 Speaker 1: like that yet, so how will that play out? Um? 640 00:42:24,239 --> 00:42:27,080 Speaker 1: And the other thing I think we'll see, especially with 641 00:42:27,080 --> 00:42:32,640 Speaker 1: with Acman uh, you know, putting out such significantly new 642 00:42:32,680 --> 00:42:36,600 Speaker 1: deal terms is how will they evolve? So how will 643 00:42:37,400 --> 00:42:42,040 Speaker 1: how will these structures become even more beneficial to not 644 00:42:42,080 --> 00:42:46,080 Speaker 1: only the targets, but in the end, the investors and 645 00:42:46,160 --> 00:42:49,280 Speaker 1: that I think, you know, we'll see. We are already 646 00:42:49,280 --> 00:42:52,759 Speaker 1: seeing evolution in the terms of SPAC deals. I think 647 00:42:52,800 --> 00:42:56,400 Speaker 1: we will continue to see that. They'll be fascinating to watch. 648 00:42:57,440 --> 00:43:01,200 Speaker 1: Is the market for spects sufficiently hot enough such that 649 00:43:01,480 --> 00:43:03,520 Speaker 1: if Tracy and I wanted to quit our jobs and 650 00:43:03,600 --> 00:43:07,640 Speaker 1: launch like a media spack with using our name and 651 00:43:07,760 --> 00:43:10,160 Speaker 1: using our wide audience from the podcast, that we could 652 00:43:10,160 --> 00:43:14,680 Speaker 1: pull one off of this market. That's the real question. Well, 653 00:43:14,840 --> 00:43:18,359 Speaker 1: if if Billy Bean and Paul Ryan could do it, 654 00:43:19,440 --> 00:43:21,640 Speaker 1: that's what That's what That's what I'm thinking. I feel 655 00:43:21,640 --> 00:43:27,880 Speaker 1: like we're that kind exactly. Just let me know. And 656 00:43:28,000 --> 00:43:31,239 Speaker 1: the other thing you see is repeats facts, especially from 657 00:43:31,280 --> 00:43:33,800 Speaker 1: some of the big from some of the big sponsors, 658 00:43:33,880 --> 00:43:35,799 Speaker 1: is they do one and then they go on and 659 00:43:35,800 --> 00:43:38,560 Speaker 1: do another. And I think what happens is when you're 660 00:43:38,560 --> 00:43:43,759 Speaker 1: out there looking for one, you see multiple opportunities, and 661 00:43:43,840 --> 00:43:47,200 Speaker 1: maybe some private companies that aren't quite ready, but they're 662 00:43:47,200 --> 00:43:49,680 Speaker 1: going to be there and six months to a year, 663 00:43:49,800 --> 00:43:52,600 Speaker 1: and so I think you see opportunities and that's why 664 00:43:52,640 --> 00:43:54,520 Speaker 1: you see so many. It's why I think that's one 665 00:43:54,520 --> 00:43:59,719 Speaker 1: of the reasons you see repeats facts seat fact sponsors. Right, 666 00:44:00,800 --> 00:44:02,359 Speaker 1: all right, well, Joe and I are going to work 667 00:44:02,400 --> 00:44:07,400 Speaker 1: on our repeat series of spats with extremely generous sponsor 668 00:44:07,600 --> 00:44:12,000 Speaker 1: terms for for for both of us. Okay, Kelly, you've 669 00:44:12,000 --> 00:44:16,000 Speaker 1: been so generous in answering all of our very cynical 670 00:44:16,040 --> 00:44:18,759 Speaker 1: spat questions, So thank you so much. Really appreciate your time. 671 00:44:19,040 --> 00:44:22,600 Speaker 1: Kelly Driscoll from Fusion acquisitioning for Thank you. It's been 672 00:44:22,640 --> 00:44:37,080 Speaker 1: my pleasure. Thank you very much. Uh So, Joe odd 673 00:44:37,080 --> 00:44:40,320 Speaker 1: thoughts back, that's next, right, I mean like we could 674 00:44:40,360 --> 00:44:45,520 Speaker 1: do one. Right. I'm a little bit worried about like 675 00:44:45,760 --> 00:44:49,080 Speaker 1: legal liability if everything goes wrong, but yes, in theory, 676 00:44:49,120 --> 00:44:51,359 Speaker 1: we could. You know. I often think like when there's 677 00:44:51,400 --> 00:44:54,120 Speaker 1: a boom, I'm like, the only real idiots are just 678 00:44:54,200 --> 00:44:56,200 Speaker 1: the people that don't just like dive in and take 679 00:44:56,239 --> 00:44:59,400 Speaker 1: advantage of it. Like I remember thinking like with all 680 00:44:59,440 --> 00:45:01,920 Speaker 1: the I C it's like, you're really idiot if you're 681 00:45:01,960 --> 00:45:03,719 Speaker 1: not like trying to launch an i C right now. 682 00:45:03,760 --> 00:45:05,720 Speaker 1: And I kind of feel like we're sort of stupid 683 00:45:05,760 --> 00:45:08,080 Speaker 1: for not launching us back. But I think we should 684 00:45:08,080 --> 00:45:12,399 Speaker 1: just you know, stick to podcast stuff like that. Yeah, Okay, Um, 685 00:45:12,400 --> 00:45:14,320 Speaker 1: but you know what, you know what I kept thinking 686 00:45:14,400 --> 00:45:17,360 Speaker 1: during that entire conversation, We're talking about SPACs as this 687 00:45:17,480 --> 00:45:21,839 Speaker 1: sort of late stage market phenomenon, but I have no 688 00:45:21,920 --> 00:45:25,880 Speaker 1: idea what stage of the cycle we're actually in at 689 00:45:25,880 --> 00:45:27,880 Speaker 1: the moment when it comes to the economy. And I 690 00:45:28,280 --> 00:45:31,439 Speaker 1: know you don't like the subject of or you don't 691 00:45:31,440 --> 00:45:34,320 Speaker 1: like the simplistic take that markets are sort of divorced 692 00:45:34,320 --> 00:45:36,560 Speaker 1: from the real economy at the moment, but you have 693 00:45:36,640 --> 00:45:39,600 Speaker 1: to admit that that seems kind of out of sync 694 00:45:39,719 --> 00:45:43,600 Speaker 1: at a time when a lot of businesses are struggling 695 00:45:43,760 --> 00:45:46,719 Speaker 1: for capital, smaller businesses, at the same time, we have 696 00:45:46,880 --> 00:45:51,399 Speaker 1: this boom in spacts that you know, companies that are 697 00:45:51,440 --> 00:45:54,520 Speaker 1: being pursued by spacts aren't having any trouble whatsoever and 698 00:45:54,600 --> 00:45:58,440 Speaker 1: getting new capital. It just feels really, really strange. Now, 699 00:45:58,680 --> 00:46:01,640 Speaker 1: it is really strange, But I do think and I 700 00:46:01,719 --> 00:46:05,640 Speaker 1: still can't get away from this idea that just structurally, 701 00:46:05,800 --> 00:46:09,719 Speaker 1: as a market, it kind of feels it fits with 702 00:46:09,920 --> 00:46:13,279 Speaker 1: periods of speculative media that like in theory, like you know, 703 00:46:13,320 --> 00:46:15,839 Speaker 1: I p o s can exist throughout every cycle and 704 00:46:16,120 --> 00:46:20,759 Speaker 1: venture and pe. But it feels like SPACs as a 705 00:46:20,920 --> 00:46:25,560 Speaker 1: financing vehicle have to be associated with some sort of 706 00:46:26,239 --> 00:46:29,239 Speaker 1: speculative fervor some sort of euphoria on the market. And 707 00:46:29,280 --> 00:46:31,360 Speaker 1: I think you know where we are in the business cycle, 708 00:46:31,480 --> 00:46:34,120 Speaker 1: I don't know. And how much longer this bowl market 709 00:46:34,200 --> 00:46:36,640 Speaker 1: can go on, assuming it's still going on by the 710 00:46:36,640 --> 00:46:38,600 Speaker 1: time people are listening to this, I don't know. But 711 00:46:38,640 --> 00:46:41,239 Speaker 1: I don't think there's anyone who's doubting that there is 712 00:46:41,320 --> 00:46:47,080 Speaker 1: a lot of sort of hunger for risk in this market. Yeah, 713 00:46:47,239 --> 00:46:48,840 Speaker 1: a lot of hunger for risk and a lot of 714 00:46:49,040 --> 00:46:51,719 Speaker 1: I don't want to say naivete, but like trust in 715 00:46:51,960 --> 00:46:54,600 Speaker 1: people able to achieve those returns. And I think that's 716 00:46:54,600 --> 00:46:58,120 Speaker 1: one thing that really came through the conversation is just 717 00:46:58,280 --> 00:47:02,040 Speaker 1: how important the managers or the sponsors actually are to 718 00:47:02,280 --> 00:47:05,719 Speaker 1: making this fact a success and you're sort of completely 719 00:47:05,800 --> 00:47:09,760 Speaker 1: dependent on them. I mean, you do exercise some rights 720 00:47:09,840 --> 00:47:12,680 Speaker 1: over the companies that they acquire, you can vote on them, 721 00:47:12,680 --> 00:47:16,200 Speaker 1: but really it feels like you're quite dependent on them 722 00:47:16,239 --> 00:47:19,760 Speaker 1: to make the right decisions. Trust is a really good word, 723 00:47:19,760 --> 00:47:21,680 Speaker 1: a really good way to put it, and I think 724 00:47:21,680 --> 00:47:24,640 Speaker 1: it's one of those things that trust and confidence kind 725 00:47:24,680 --> 00:47:29,880 Speaker 1: of emerge in bold markets. Um, and it's one of 726 00:47:29,880 --> 00:47:32,080 Speaker 1: those things like when you know, one day the tide 727 00:47:32,120 --> 00:47:34,920 Speaker 1: does go out and you're, like other words, untrustworthy players 728 00:47:34,920 --> 00:47:38,600 Speaker 1: in the market. But yes, right now, whether it's the 729 00:47:38,680 --> 00:47:41,960 Speaker 1: confidence that Elon Musk will be able to deliver on 730 00:47:42,239 --> 00:47:45,279 Speaker 1: all his dreams or the Nicola guy or whatever it is, 731 00:47:45,640 --> 00:47:49,080 Speaker 1: there is a lot of faith in various managers and 732 00:47:49,200 --> 00:47:52,600 Speaker 1: individuals that they will be able to deliver something extraordinary. 733 00:47:52,680 --> 00:47:55,800 Speaker 1: And right now, you know the investors who make those beliefs, 734 00:47:55,800 --> 00:47:59,680 Speaker 1: they're doing very well. Yeah, I think that's exactly right. Okay, 735 00:48:00,120 --> 00:48:03,319 Speaker 1: shall we leave it there. I'll see it there. This 736 00:48:03,480 --> 00:48:06,440 Speaker 1: has been another episode of the Odd Thoughts podcast. I'm 737 00:48:06,480 --> 00:48:09,240 Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy 738 00:48:09,280 --> 00:48:12,879 Speaker 1: Alloway and I'm Joe Wisntal. You could follow me on 739 00:48:12,920 --> 00:48:16,920 Speaker 1: Twitter at the Stalwart. Follow our producer on Twitter, Laura Carlson. 740 00:48:17,040 --> 00:48:20,880 Speaker 1: She's at Laura M. Carlson. Followed the Bloomberg head of podcast, 741 00:48:20,920 --> 00:48:24,560 Speaker 1: Francesca Levie at francesco Today, and check out all of 742 00:48:24,560 --> 00:48:28,360 Speaker 1: our podcasts unto the handle at podcasts. Thanks for listening.