Is This Lucrative Asset Class Coming Back to Life?

Something interesting is happening in the realm of venture finance.

At the same time that big-name SPACs like those run by billionaire Bill Ackman are handing their money back to investors, we’re seeing a spark of interest in other parts of the market.

It’s important you know what’s going on.

In a market like this, opportunities can erupt out of thin air.

By just about every traditional metric, it’s a horrible time to take a company public – at least for the current owners of the company.

For them, valuations are low and the reward for their effort will be dramatically lower than it would be at the top of the market. Billions of dollars’ worth of potential wealth has evaporated over the last six months.

But here’s the thing… The value is still there. The market just isn’t eager to pay for it.

That’s why a couple of SPAC announcements this week are interesting. They may offer quite an opportunity for investors with a longer time horizon.

Take the news from a digital mortgage lender called Better, for example. It recently filed to go public.

You can be sure that its founders and early investors are not overly excited about the proposition right now. Better’s backers are leaving billions on the table.

But they have little choice.

Thanks to market conditions – the mortgage industry is shrinking by the second – the company needs cash. It has big growth plans… but not the cash flow to fund them.

But a SPAC deal that values the company at $7 billion would quickly put $750 million into the company’s coffers.

For a firm that’s cut its expenses dramatically (including laying off thousands of workers), the cash could go a long way.

It’s a deal to watch.

Better has certainly caught its share of controversy. This could be the easy way out for its founders – cashing out while they still can. Or it could be a chance for the company to build a foundation and charge forward even with the stiff headwinds.

My point isn’t to tell you to rush out and invest in the deal.

Not at all.

The idea here is to show you that the sector that so many have called dead is still kicking. Big money is still changing hands.

Another potential deal to watch comes from Peter Thiel’s Bridgetown Holdings (BTWN).

Rumor has it that it’s working on a deal with a Singapore-based telecom company called Circles.Life.

It’s all rumor and speculation at this point… but if it comes to life, it’d be big news.

It would prove that SPACs are still alive and well.

SPACs have certainly earned their share of controversy over the last two years. But there’s no denying that – when the numbers are right – this is an efficient and cost-effective way to bring a private company to public markets.

Savvy investors would be wise to keep a close eye on the sector.

I’ll keep you updated on what I’m hearing.

Be well,

Andy