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SoFi Jumps 12% in Nasdaq Debut After Palihapitiya SPAC Merger

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  • CEO Noto says firm is preparing to offer IPOs to Main Street
  • Chamath Palihapitiya has blasted SoFi rival Robinhood

SoFi Technologies Inc., the student-loan operator and stocks-trading platform, jumped 12% in its Nasdaq debut after merging with investor Chamath Palihapitiya’s blank-check company earlier this year.

The shares, which trade under the ticker SOFI, rose to $22.65 Tuesday from $20.15 Friday, when it still traded under the SPAC ticker IPOE. That compares with an all-time high of $25.78 in February.

SoFi, which started as an online lender for students and homeowners, has expanded into payment and investing services, allowing users to trade equities and cryptocurrencies. The company combined with Social Capital Hedosophia Holdings Corp. V in January, a deal that valued San Francisco-based SoFi at $8.65 billion including debt, according to a statement at the time.

“We have an incredibly unique proposition for consumers, and we’re the only place that offers you a full suite of financial-services products for your needs on one mobile app platform,” SoFi Chief Executive Officer Anthony Noto said in an interview Tuesday.

Palihapitiya, SoFi’s investor and sponsor in the listing, has blasted rival Robinhood Markets Inc., which critics have blamed for much of the “meme-stock” frenzy and “gamification” of the stock market. He said on Twitter that Robinhood users should delete the app and suggested SoFi as a replacement.

Robinhood is also about to tap the public market through an initial public offering in late June.

IPO Plans

Like Robinhood, SoFi also plans to offer IPO shares to its users.

“IPOs are often not made available to Main Street, and we think that we can offer them to Main Street in a responsible way and give our investors access to a new investment vehicle,” Noto said.

SoFi hasn’t yet helped distribute any IPOs, but is expected to be an underwriter of the special purpose acquisition company LTV Capital Partners I, Noto said, adding that the platform intends to service IPOs, direct listings that raise new capital and SPACs.

FIGS, a direct-to-consumer medical-scrubs maker, was the first company to use Robinhood’s platform to distribute shares to retail investors. It went public last week.

Source: Bloomberg – SoFi Jumps 12% in Nasdaq Debut After Palihapitiya SPAC Merger

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Source: https://spacfeed.com/sofi-jumps-12-in-nasdaq-debut-after-palihapitiya-spac-merger?utm_source=rss&utm_medium=rss&utm_campaign=sofi-jumps-12-in-nasdaq-debut-after-palihapitiya-spac-merger

Automotive

Lucid Motors kicks off market debut with EV factory expansion plans

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Lucid Group (formerly Lucid Motors) will be expanding its factory in Casa Grande, Arizona, by 2.7 million square feet, CEO Pete Rawlinson said Monday just hours after the company officially went public with a $4.5 billion injection of capital.

The company also said it has 11,000 paid reservations for its flagship luxury electric sedan, the Lucid Air.

Part of the expansion will be used to accommodate the manufacturing of Project Gravity, the mysterious title given to the automaker’s forthcoming luxury electric SUV, a Lucid spokesman told TechCrunch. Not much is known about Gravity at this point, other than that it’s scheduled to be available from 2023 and that it will use the same battery platform as the Air. Patent drawings submitted to the European Union Intellectual Property Office, first noticed by a member of the Lucid Forum, reveal little more than the renderings on Lucid’s website.

The company is also planning on bringing more of the component production in-house, including major pieces such as the body panel stampings, the spokesman added. These parts were being handled by an external supplier.

The Casa Grande City Council approved the plans to expand the nearly 1 million-square-foot space in March. The first phase of the factory, which cost around $700 million to construct, went up in a record 12 months after breaking ground. Lucid has said that it wants to expand production capacity from around 30,000 vehicles per year to up to 400,000.

Lucid has had a long, sometimes tenuous road to the public market. The company first set its sights on bringing an electric sedan to production as early as 2018, but it quickly hit funding challenges that pushed this timeline further and further back. Lucid received major funding in 2018 with a $1 billion investment from Saudi Arabia’s sovereign wealth fund, which continued to be its largest shareholder throughout Lucid’s merger with special purpose acquisition company Churchill Capital IV Corp.

That merger hit a bit of a hiccup last week when the company failed to garner a sufficient number of votes on a key proposal — likely due to the rise of retail traders and malfunctioning spam filters, executives said in an investor call.

Lucid, which will now operate under the name Lucid Group, is listed under the ticker symbol LCID.

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Source: https://techcrunch.com/2021/07/26/lucid-motors-kicks-off-market-debut-with-ev-factory-expansion-plans/

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SPACS

ServiceMax promises accelerating growth as key to $1.4B SPAC deal

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ServiceMax, a company that builds software for the field-service industry, announced yesterday that it will go public via a special purpose acquisition company, or SPAC, in a deal valued at $1.4 billion. The transaction comes after ServiceMax was sold to GE for $915 million in 2016, before being spun out in late 2018. The company most recently raised $80 million from Salesforce Ventures, a key partner.

Broadly, ServiceMax’s business has a history of modest growth and cash consumption.

ServiceMax competes in the growing field-service industry primarily with ServiceNow, and interestingly enough given Salesforce Ventures’ recent investment, Salesforce Service Cloud. Other large enterprise vendors like Microsoft, SAP and Oracle also have similar products. The market looks at helping digitize traditional field service, but also touches on in-house service like IT and HR giving it a broader market in which to play.

GE originally bought the company as part of a growing industrial Internet of Things (IoT) strategy at the time, hoping to have a software service that could work hand in glove with the automated machine maintenance it was looking to implement. When that strategy failed to materialize, the company spun out ServiceMax and until now it remained part of Silver Lake Partners thanks to a deal that was finalized in 2019.

TechCrunch was curious why that was the case, so we dug into the company’s investor presentation for more hints about its financial performance. Broadly, ServiceMax’s business has a history of modest growth and cash consumption. It promises a big change to that storyline, though. Here’s how.

A look at the data

The company’s pitch to investors is that with new capital it can accelerate its growth rate and begin to generate free cash flow. To get there, the company will pursue organic (in-house) and inorganic (acquisition-based) growth. The company’s blank-check combination will provide what the company described as “$335 million of gross proceeds,” a hefty sum for the company compared to its most recent funding round.

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Source: https://techcrunch.com/2021/07/16/servicemax-promises-accelerating-growth-as-key-to-1-4b-spac-deal/

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Private Equity

Investors find European unicorns reluctant to join SPAC boom

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The U.S. SPAC market kept rolling along this week with news that Satellogic will go public on the Nasdaq stock exchange thanks to a merger with a blank check company. The Earth-imagery-focused company is standard SPAC fare, with strong capital needs and distant revenues. It was not alone in pursuing the transaction type Tuesday, with news breaking that Nextdoor will also go public on the Nasdaq via a SPAC.

Nextdoor’s projections, as TechCrunch noted, were more modest and thus more believable than what we’ve seen from many other SPAC-led debuts.

These companies represent the two poles of blank-check-powered public offerings: Some startups taking the SPAC route are more speculative, banking on revenues to come, while others feature more established companies with a history of material revenue growth. It’s easy to find more examples of both varieties. Acorns’ deal fits the established trend. Lidar SPACs? Less so.


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Given the breadth of companies pursuing blank-check deals, the SPAC boom isn’t over even if there has been chatter that the party is breaking up. Bessemer partner Mary D’Onofrio told The Exchange, for example, that while the “pace of SPAC IPOs” and combinations have slowed, “there is still $128 billion of SPAC dry powder in the market seeking acquisitions and incentivized to transact.”

Matt Murphy, a partner at Menlo Ventures, helped explain the SPAC pace deceleration that D’Onofrio discussed, telling The Exchange that the pace of SPAC deals “has slowed as they’ve gotten more scrutiny and don’t seem quite as ‘easy’ as they once were.”

But this week’s U.S. SPAC news tells us that blank-check companies are still finding a diverse set of companies to take public. But what about other regions? Unicorns are hardly unique to the U.S. startup ecosystem. Are we seeing similar SPAC interest in Europe?

The Exchange tried to find out, given that we’ve seen huge rounds from the region and a few IPOs over various types. Is the SPAC game afoot in Europe?

Hunting European targets

There’s a huge number of SPACs trading in the United States currently hunting for a deal. And there is historical precedent for U.S.-listed blank-check companies taking on European targets. Global law firm Skadden counts 16 U.S. SPAC-led transactions with European companies from 2015 through February of this year, for example.

“For the past few weeks, we’ve been approached on a recurring basis, much like all known French and European scaleups,” Aircall’s co-founder Jonathan Anguelov told French financial newspaper Les Échos last March (translation: TechCrunch). However, being approached doesn’t necessarily mean that European unicorns are entertaining the offers.

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Source: https://techcrunch.com/2021/07/07/investors-find-european-unicorns-reluctant-to-join-spac-boom/

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SPACS

SPAC charts are exercises in the limits of hype

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Having read more SPAC investor decks in the last twelve months than I’d like to admit to, I thought I was over being irked by their bullishness. Call me conservative, but public companies shouldn’t be full of shit, and companies going public should probably aim for a similar target.

That’s why S-1 filings for traditional IPOs are great. When it comes to numbers, they are honest. The filings don’t include forecasts for the next year, let alone the next half decade. Sure, companies will make a pitch for their model and methods, but S-1 filings are pretty good from an honesty perspective. Mostly.

SPAC investor decks are the opposite. I mean, look at this chart:

Historical revenue? Who needs it! Look at the growth that could maybe, possibly, theoretically happen! 201% CAGR!

Here’s another favorite:

Sure, Bob.

Here’s a super-grainy image from the Local Bounti SPAC investor deck. It’s the least-blurry version I could find. Enjoy the charts!

I’m going to change the numbers on these, label them “Alex’s future blogging output” and turn them in before my next performance review.

Here’s another great one, this time from Pear Therapeutics:

And one more, this time from the recent Embark deal that TechCrunch covered here:

What about historical revenues? Or expectations from 2021, 2022 or 2023? Who knows!

Given what we’ve learned about the accuracy of SPAC performance predictions, I think we need a Godzilla-sized Salt Bae to make all of this palatable.

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Source: https://techcrunch.com/2021/06/24/spac-charts-are-exercises-in-the-limits-of-hype/

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