SPACs have been all over the headlines the past year, but they’re not the only alternative to traditional IPOs that are booming. Rod Turner explains the differences between SPACs, direct listings, and Regulation A+ offerings.
What’s especially interesting about this story isn’t the sensational headline so much as his business model.
The 2015 JOBS Act, including Regulation A+, is driving the biotech industry forward. Biotech companies are getting to their IPOs faster, at higher valuations, and using the money to fund further R&D, and hiring to support it.
The push to video conferencing during the pandemic has changed the world of raising capital forever. This CEO raised over $3 billion in their “virtual IPO”, meeting over 1,000 people, including high-profile fund managers, in one-on-ones and groups, via zoom over a 7-day period.
CFO reports that 2020 was a breakout year for Reg A+ offerings. Roughly $3 billion has been raised via Reg A+ since it began in 2015. Though this option hasn’t received the media coverage that SPACs have, we expect that to change this year.
While venture capital has its place in the entrepreneur ecosystem, they eliminate most startups and early-stage companies for consideration. Founders need to leave the old model behind.
We love seeing companies with life-saving technology get the capital they need to get their technology to patients. But we hate seeing the founders have to give up so much of their hard-earned equity to do so.
Is Substack really worth $650M?
Something is worth what someone is willing to pay for it, and apparently investors are willing to pay $65M for 10% of Substack. This begs the question: how much have they given up along the way to raise that money?