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Eric’s Top 3 – Influencer Software

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SPACInsider contributor Eric Weidemann this week compiled his three favorite potential SPAC targets among targets producing software used by influencers. We look at why they are compelling and why each could be a fit for a blank-check merger.


As the SPAC market cools and certain sectors get crowded with hungry SPACs, some teams may need to zag into a less competitive sector while the rest of the field zigs. One sector that traditionally trades well in the public markets, but has largely slipped by SPACs’ gaze is consumer software.

Of the 103 SPACs that announced a deal but have not yet closed, only one struck a deal with consumer software company. This deal between Apex Technology (NASDAQ:APXT) and Avepoint, which develops software tools for the Microsoft Office ecosystem, initially traded well and hit $16.63 on February 3 before being pulled down by the broader market conditions afflicting all SPACs.

No deal is necessarily guaranteed to break through the current funk, but consumer software might be the right place to look to capture retail energy while avoiding sectors the market is fatigued with or that have been picked over already.

More specifically, in an age of meme stocks and clout-chasing, SPACs could do much worse than combine with the platforms that are fueling independent creatives.

Soundcloud

Music has been moving up the charts as an area of interest for SPACs with Vistas Media’s (NASDAQ:VMAC) deal this week for Middle eastern music streamer Anghami. Soundcloud has over 250 million songs from 30 million creators for other SPACs to jam to. By comparison, this is several times the size of Spotify’s (NYSE:SPOT) 70 million-song library.

But, SoundCloud is a platform that attracts plenty of hobby creators so it is not a complete apples-to-apples comp. Nonetheless, the last time Soundcloud tipped its hand on its financials, it showed it had achieved a run-rate of $200 million in the fourth quarter of 2019, which is a little under a tenth of Spotify’s 2020 revenue. Spotify has a market cap of $54 billion, so, there is value there.

SoundCloud may well have done better once the pandemic shut everyone in with their streaming services as their primary sources of entertainment. Another trend moving in Soundcloud’s favor is independent musicians finding routes to fame and monetization completely removed from the record label model.

The company has leaned into this with a monetization model for indie artists that rewards them more for listeners who become sustained fans with repeat listens. As live venues have shuttered over due to lockdowns, smaller acts have been migrating to whichever streaming service gave them the best deal.

Former Spotify exec Troy Carter joined SoundCloud’s Board last month further boost its monetization efforts. This has come as a part of a wider management shake-up that saw SoundCloud’s co-founders step away in 2019.

The opportunity from a SPAC standpoint is catch SoundCloud potentially on the upswing after years of management uncertainty and bring additional industry expertise. This could potentially come in the form of The Music Acquisition Corporation, (NYSE:TMAC.U) which has $230 million in trust and is led by former Universal Records executive Neil Jacobson.

Canva

Part of being independently creative is the need to dress up your work professionally. Adobe has long held the mantle on visual tools, but the value of its suite has always been in the depth it offered for professional designers above its approachability for amateurs.

Canva takes the opposite approach with an expansive free version while also charging $12.99 per month to those who want access to more templates, stock media and tools to pop one design into a full brand kit.

The company has about 50 million active users and has not been content with a slow grow despite being profitable since 2017. Instead, it has used M&A to buy up specific features that give it a leg-up on Adobe. This year, it bought Kaleido for its AI tools to instantly remove backgrounds from photos and videos and Smartmockups which added speed to moving from a draft visuals to merchandise design.

This came on top of four other acquisitions that brought in stock media libraries and other functions. These have been fueled by a fiery fundraising effort that has seen it raise over $300 million, most recently a $60 million round in June of last year at a valuation of $6 billion.

The company has not shared many financials publicly, but noted last year that it has grown its paid subscriber base to 1.5 million, which would be worth $233.8 million annually at $12.99 per month.

Eleven SPACs currently searching for targets have named software or consumer tech as their areas of focus while 10 more have filed to IPO. Part of the impetus behind the company’s last capital raise was to fund the Australia-based company’s move to the US, as it builds out Texas as a major hub and a SPAC deal would further cement its position in North America.

Caffeine

SPACs have played a major role in listing a wave of millennial-focused companies, but it’s not too early to look at Gen Z.

Caffeine is a part of a new generation of media platforms specifically looking to cut in on the last wave led by YouTube, Instagram and Twitch. Caffeine is most like the latter, giving users the ability to stream themselves doing just about anything for free while interacting with the audience. Much of this activity is made up by gaming, but the company has put a focus on hosting and inspiring live rap battles.

It has partnered with Drake and his Ultimate Rap League (URL) to broadcast events that have reached over 8.7 million viewers.

These efforts have also sucked in a fair amount of capital, as Caffeine has raised $259 million to fuel growth. Its past two funding rounds – including a $113 million Series D in July – included strategic investors from the broadcasting and space Fox (NASDAQ:FOX), 21st Century Fox and Cox Communications. This last round valued the company at north of $600 million.

The video space for these new age players looks set to remain hotly contested with Vimeo set to go public this year and the fight for onboarding key influencers has become a key battleground.

Caffeine could still use investment in its platform as well. It actually offers a quicker route to streaming than competitors as users do not have to download any software and can register and stream in a small number of clicks. But, the company does not yet have mobile streaming offerings, and could use SPAC capital to build this out and attract more influencer clout to the platform.

The potential that Caffeine presents to scale up as a full-spectrum media channel also makes it a fit with a greater number of SPAC teams, many of which have deep media experience and are searching in this domain.

Fourteen SPACs are searching for TMT targets, with another six specifying media and entertainment as their hunting grounds. Among the interesting potential fits there are Group Nine (NASDAQ:GNACU), whose CEO leads the group of the same name that holds media properties including Thrillist, The Dodo and NowThis.

Progress Acquisition Corp. (NASDAQ:PGRWU) could also bring interesting experience as it is led by from Warren Schlichting, former president of Sling TV with earlier stops as an exec at DISH Network (NASDAQ:DISH) and Comcast (NASDAQ:CMCSA).

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Source: https://spacinsider.com/2021/03/05/erics-top-3-software-for-influencers/

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Eric’s Top 3 SPAC Targets – Location-Based Tech

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SPACInsider contributor Eric Weidemann this week compiled his three favorite potential SPAC targets among location-based services software and technology companies. We look at why they are compelling and why each could be a fit for a blank-check merger.


We are now well past our first generation of location-based service players like Uber gaining unicorn status and changing market-wide expectations. But, with the increase in connected devices and complexity of networks with 5G on the way there is no shortage of opportunities to expand these new models or introduce entirely new ones to the market.

SPACs have already wet their beaks in the latest generation of location-based technology players this year. Software II (NASDAQ:SAII) announced a combination with vehicle data analysis firm Otonomo February 1, Osprey (NYSE:SFTW) announced a deal with satellite-observation company Black Sky two weeks later and NavSight (NYSE:NSH) kicked off March with its announced merger with space-based data tracker Spire Global.

Mapbox

The first generation of big apps to use location relied primarily on Google Maps and Mapbox aims to take its place.

The San Francisco-based company was founded in 2010 and initially served governments and non-profits primarily. But, last month it took $150 million from SoftBank and named a new CEO with the goal of capturing market share among automakers’ built-in navigation systems. This funding round valued the company at over $1 billion and the company expects to generate over $100 million in revenue in 2021, according to Bloomberg.

Mapbox has already been contracted to develop BMW’s (DE:BMW) next generation in-car navigational suite. This work comes at a particularly valuable point as automakers begin integrating autonomous capabilities to vehicles and Mapbox aims to win contracts with about a dozen more automakers this year.

It won over BMW with the customizability of its map aesthetics and potential for unique vehicle integrations. Before its pivot to the dashboard, Mapbox’s largest clients included Instacart, Snapchat (NYSE:SNAP), the Weather Channel, and Facebook (NASDAQ:FB).

All of this puts Mapbox right at the confluence of many hot sectors – autotech, locational marketing and ecommerce delivery services. The company even launched a joint venture with Softbank in May to track and map the coronavirus spread in Japan, giving it some experience in digital health applications.

While Mapbox’s piece of the cars of future may be more familiar and somewhat less exciting than lidar, it has the potential to provide more recurring revenue than lidar as it is primarily a software rather than hardware product.

Mapbox could fit the focuses of a large number of SPACs, but three teams currently searching have specified automotive or mobility technology as their hunting ground – Live Oak Mobility (NYSE:LOKM), Atlantic Coastal (NASDAQ:ACAHU) and Kensington II (NYSE:KCAC.U). Two of these produced a pair of 2020’s most successful SPAC deals: Live Oak’s last target Danimer Scientific (NYSE:DNMR) closed yesterday at $37.75, while Kensington’s target Quantumscape entered the long weekend at $44.75.

DeepMap

DeepMap meanwhile is working to form the important connective tissue between a digital map and an autonomous vehicle by doing more intensive vehicle-guided mapping work to give cars a more detailed expectation of exact conditions.

The global demand for this level of HD maps for autonomous vehicles is expected to grow by a CAGR of 34.3% through 2028. These maps are also of critical value as autonomous vehicle technology companies attempt to scale because each has so far limited testing operations to closed areas of known roads.

For its part, DeepMap has racked up a bevy of awards in these efforts as one of Gartner’s top 5 autonomous vehicle system vendors in 2020 and one of Forbes Top 50 AI companies the same year. Part of what companies like DeepMap also do are to crowdsource regional differences in traffic rules, which are numerous.

Right turn on red, the “Pittsburgh left” and differing definitions of right-of-way are not systems a robot-car is likely to pick up or adapt to on its own. Even a cogent layout of street and highway lanes are not always available via models developed from aerial imaging.

For all of that promise the company has not yet raised mountains of outside cash for its development efforts. It has taken in just $92 million according to Crunchbase, gaining a valuation of $450 million in a 2018 raise according to TechCrunch.

But three years is a long time in the tech world. If DeepMap had paused its fundraising plans due to investor sentiment pre-2020, its connection with the autonomous vehicle world gives it a very different climate of options now.

NextNav

While Mapbox tracks the exterior world and DeepMap traces its lanes, NextNav has concentrated on mapping the interiors of buildings for public safety and commercial applications.

First responders need more information than the outer contours of a building in order to conduct rescue missions. In 2019, the FCC required wireless carriers to be able to provide the vertical position of their devices so rescue workers can better determine where victims in distress might be.

NextNav is helping carriers meet this requirement and is already partnering with Motorola for such situations, claiming that 3D geolocation views of crisis locations reduces search times by over 85%. It has also licensed its technology to 3AM which produces wearable technology for first responders themselves and helps their squads to keep accurate locations on one another. Seventy percent of first responders have reported using inadequate maps and 80% of 911 callers today use their cell phones for such calls.

But, the capabilities of NextNav extends beyond public safety and into gaming. The company has partnered with Unity (NYSE:U) with a plug-in that will allow developers to build 3D gaming experiences both up and down while most AR experiences are limited to a horizontal plane. About 84% of the US population lives in urban, multi-story buildings and AR game developers have been seeking to find a way to better integrate those environments.

Crucially, NextNav has systems that do not require GPS, which is prone to failures in urban areas and few location-based services have backups to it.

Goldman Sachs (NYSE:GS) has invested in NextNav’s last two rounds, including at $120 million Series E in January 2020, and the company has raised about $278 million in outside funding overall. As a tech company initially launched in 2008, it likely has a fair amount of early investors ready for a liquidity event and its Goldman Sachs connections could easily link it up with the SPAC market.

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Source: https://spacinsider.com/2021/04/02/erics-top-3-location-based-technology/

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New Providence Acquisition Corp. (NPA) Shareholders Approve AST & Science Deal

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AST-SpaceMobile-2

New Providence Acquisition Corp. (NASDAQ:CGRO) announced that its shareholders approved its business combination with space-based broadband provider AST & Science at a special meeting earlier today.

The parties expect to close the deal by about April 6, after which the combined company will operate as AST SpaceMobile with its shares and warrants trading on the Nasdaq under the symbols “ASTS” and “ASTSW”, respectively.

New Providence noted in its press release that AST expects to receive $462 million in proceeds after the vote, and while it did not share redemption figures, this number indicates they were minimal as this is the roughly sum of its PIPE and estimated trust value pre-redemptions

The two sides initially announced their $1.4 billion business combination on December 11. Midland, Texas-based AST is working to build the first space-based cellular broadband network to fill coverage gaps and eventually make 4G and 5G access universal.


ADVISORS

  • Barclays is acting as financial advisor and capital markets advisor to AST SpaceMobile.
  • Barclays and Deutsche Bank Securities Inc. acted as placement agents to New Providence in connection with the PIPE offering.
  • Deutsche Bank Securities Inc. and BTIG LLC are acting as financial and capital markets advisors to New Providence.
  • Latham & Watkins LLP and Foley & Lardner LLP are acting as legal counsel to AST SpaceMobile.
  • Kirkland & Ellis LLP is acting as legal counsel to New Providence.

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Source: https://spacinsider.com/2021/04/01/collective-growth-corporation-reports-preliminary-results-of-completion-vote-2/

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Collective Growth Corporation (CGRO) Reports Preliminary Results of Completion Vote

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Property Solutions (PSAC) & Faraday Future: Live Q&A – April 7th, 2:00PM

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A

Live Management Presentation and Q&A

Click to Register

Please join

Property Solutions Acquisition Corp. (PSAC)

&

Faraday Future

for an online investor presentation and live Q&A discussion regarding their proposed merger, featuring:

Speakers

Faraday Future, Global CEO: Carsten Breitfeld
Faraday Future, CFO: Zvi Glasman
Faraday Future, Sr. VP of Product Execution: Bob Kruse
Property Solutions, Co-CEO: Aaron Feldman

Date: Wednesday, April 7th
Time: 2:00 p.m. (Eastern Time)

  * Management will be taking questions from the audience *

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Source: https://spacinsider.com/2021/04/01/property-solutions-faraday-future-live-qa/

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