There’s been a “revolution in how the market and technology companies view SPACs,” said John Olson, a partner at Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP in San Francisco, on this week’s Drinks With The Deal Podcast. Combining with a special purpose acquisition company has made going public a real option for companies that probably would have been unable to complete an IPO, Olson said.
Investment banks and accounting firms have traditionally shied away from doing IPO work for companies with significant growth potential but not current revenue, but going public via a de-SPAC merger is an option for such entities, especially in sectors such as electric mobility and nascent markets such as telemedicine, Olson said. He nonetheless thinks the current level of SPAC activity is unsustainable but isn’t sure when or at what level it will settle out.
Olson first came to San Francisco after graduating from Williams College in 1999, and he left to go to graduate school at Johns Hopkins University in 2001 after the dot-com bubble had collapsed, an experience that makes him skeptical of arguments that the San Francisco Bay Area’s prominence as a tech center is waning. Instead, he said that many of the companies moving out of Silicon Valley are more mature businesses and that their departure could free up resources for emerging companies.