A recent article at Investment News quotes Corporate Insight analyst Justin Mattos about increasing SPAC deals in fintech:
The simple reason that SPACs deals are dominating the market is that they are a convenient shortcut allowing these fintechs to go public without the hassle of pursuing an IPO, said Justin Mattos, a senior analyst at Corporate Insight.
“When they go this route, they get immediate, predictable funding, not to mention a favorable valuation for their current offering with the promise of plans to grow beyond it,” Mattos said. “By bringing in significant funding from the deals and relying on the SPAC to handle the public listing, these fintechs end up having the time and resources to capitalize on their current momentum and turbocharge their growth.”
These deals certainly point to a shift in the strategic planning for going public, but it’s likely that only a select cohort of maturing fintechs will be able to take advantage, he said.
“Where firms like SoFi and MoneyLion have concrete plans to offer full-service financial platforms that allow clients to spend, save and invest all in one place, many others are still justifying their initial offerings and are far from ready for public listings,” Mattos said. “I expect a few more late-stage startups in the fintech space will go the SPAC route, but that may taper off under increased regulatory scrutiny of this approach.”
Read the full Investment News article here.
