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Illustration: Eniola Odetunde/Axios

The SPAC boom has acquired a reputation for democratizing investment, without the headline-grabbing volatility of last month's Reddit revolt.

Between the lines: It's a valid characterization. But it's also a complicated one, creating new opportunities for the "little guy" while further enriching those who already had swollen bank accounts.

The democratizing case goes something like this: SPACs are bringing dozens, if not hundreds, of companies to the public markets that otherwise would have continued raising money in the private markets.

  • That means retail investors, including unaccredited ones, can play in the venture capital sandbox from which they've been historically excluded. And that creates the opportunity to benefit from growth that might have already occurred before a traditional IPO.
  • And, yes, there also is all sorts of speculative trading on pre-merger SPACs, with CNBC reporting yesterday that the 50 largest had seen their share prices rise nearly 14% in 2021, raising concerns that the meme stock phenomenon extends beyond nostalgia names like GameStop and Bed Bath & Beyond.

But, but, but: SPAC sponsors are almost exclusively rich folks or well-heeled institutions, and SPAC structures further consolidate their capital via very favorable terms.

  • Yes, SPAC sponsors get locked up and there has been some downward pressure on terms. But they typically get a greater percentage ownership for less effort and shorter hold times than do traditional venture capital or private equity investors.

The bottom line: SPACs have helped level the playing field, bubble or not, but it remains decidedly tilted.

  • Go deeper: Axios Re:Cap podcast talked SPAC boom with Victoria Grace, CEO of Queen's Gambit Growth Capital. Listen via Apple, Spotify or Axios.

Go deeper

Feb 10, 2021 - Podcasts

Victoria Grace of Queen's Gambit Growth Capital on the SPAC boom

The most significant stock market story of 2021 isn’t the one about Robinhood and Reddit; it’s the story of SPACs — those blank-check acquisition companies that are multiplying like Gremlins after a midnight snack.

Axios Re:Cap talks with Victoria Grace, CEO of a $300 million SPAC called Queen's Gambit Growth Capital, about how SPACs work, why there are so many and whether the trend is a bubble.

Dan Primack, author of Pro Rata
Feb 10, 2021 - Economy & Business

Colin Kaepernick forms a SPAC

Photo by Carmen Mandato/Getty Images

Former NFL quarterback Colin Kaepernick on Tuesday disclosed that he has formed a blank-check company that will seek to raise $250 million in an IPO.

Why it matters: Kaepernick hasn't played pro football since 2016, but has remained a cultural lightning rod — either loved or loathed for his social activism, including his strong support of the Black Lives Matters movement.

Ina Fried, author of Login
34 mins ago - Technology
Column / Signal Boost

Exclusive: Meta's civil rights chief aims to "turn the knob" for good

Photo Illustration: Shoshana Gordon/Axios. Photo: Meta

A year ago, Facebook brought in Roy Austin, Jr. to lead a new team focused on civil rights. Since then, he has assembled a squad of experts advising parent company Meta on everything from voting rights to hate speech to ensuring new products don't have discriminatory impact.

The big picture: Austin's team of nine must tackle those tough issues inside a company of nearly 70,000 employees serving more than 3 billion users around the world.