October 21, 2020
Spencer Rascoff, the serial entrepreneur behind Zillow, Hotwire, and Pacaso, is helping fuel the SPAC boom on Wall Street with the IPO of blank-check company Supernova.
The special purpose acquisition company hit the New York Stock Exchange Wednesday and raised $350 million with 35 million shares priced at $10 per share. Supernova is still exploring its merger options, but Rascoff said its target will likely be something within the tech industry.
"We'll be looking for companies worth between about $1 and $5 billion dollars," Rascoff told Cheddar. "It could be in a variety of areas within tech. It could be B2B SAAS. It could be e-commerce, adtech, direct-to-consumer. So we're casting our net pretty wide."
Supernova is just the latest in a string of SPAC offerings this year that is quickly becoming one of the most popular routes to the public market.
Rascoff said there are multiple benefits to choosing a SPAC instead of a traditional IPO.
"One of them is the price discovery," he said. "When you publicly list in a traditional IPO, on average tech companies now trade up 43 percent by the end of the first day. So they're leaving a huge amount of money on the table when they go public traditionally."
Another is speed, simplicity, and mentorship.
"A traditional IPO process takes almost a year," Rascoff said. "There's a lot of market risk and complexity, but if you go public by merging into a SPAC it's just a matter of a couple of weeks."
He also touted Supernova's lineup of experienced entrepreneurs and managers, including ex-Blackstone executive Robert Reid, Michael Clifton of The Carlyle Group, and hedge fund manager Alexander Klabin.
The appeal for investors is "optionality," he said. They invest based on the experience of the people behind the SPAC, but then they get a chance to basically bail out once the merger company is announced.
"SPAC investors are drawn to SPACs because for them it's a way to get sort of an early in on a potential IPO," he said. "For example, the investors that bought into the Supernova IPO are essentially betting that my team and I are going to go and identify a great target and merge into that company or have that company merge into us, and therefore they'll end up with sort of a toehold in that newly public company."