In the run-up to an initial public offering, startups tend to fall into a quiet period, keeping their executives out of the media to avoid running into regulatory requirements.
For many executives who made their startups public in 2020 when they merged with a special-purpose acquisition company, or SPAC, there was a different and perfectly legal approach: lengthy interviews with obscure YouTube channels frequented by individual marketers. , cable news appearances and screenings. requiring billions in revenue.
Advertising and rapid growth forecasts have become routine aspects of the booming stock market alternative that is made public through SPACs. The use of so-called blank check companies, which are made public without assets and then merged with private companies, increased in 2020 and rose to a record $ 82.1 billion in 2020, from $ 13.5 billion of 2019, according to Dealogic.
Startups that were made public through SPAC, including many start-ups with no revenue, said they were drawn to the relative speed and certainty of the process, which can be completed months faster than some IPOs.
But as the tool gains its favor, there are concerns about regulatory differences between the two modes of advertising. According to some venture capitalists and corporate governance experts, the prospect of attracting retailers through the media and intrinsically speculative projections poses a greater risk to stock market investors.