David here.

I’m absolutely humbled to announce that as of last week, I’m officially one of the 10 youngest directors of a NASDAQ-listed company.

Last Friday, 10X Capital Venture Acquisition Corp. (founded by my company 10X Capital), officially closed its initial public offering, pulling in $175 million. We’re listing on the NASDAQ under the symbol VCVCU.

Now, I wanted to share this news with you today for a couple of reasons.

First (and on a more personal note), I owe this to the support of my family and friends. Thirty years ago, my family and I came to the United States as immigrants with only a few hundred dollars to our name… and this kind of achievement really speaks volumes to their hard work and dedication.

And second, this IPO was extremely unique. You see, 10X Capital Venture Acquisition Corp. is a SPAC, or a special purpose acquisition company.

They’ve become one of the hottest trends in startup-land, and they’re likely going to define the way private companies go public for years to come.

Let’s dive into exactly what they are, and exactly why you need to have them on your radar right now.

What is a SPAC?

A SPAC is a “blank-check” company with no commercial operations.

Instead, they’re designed to go public with the purpose of acquiring a private company with their IPO funds… essentially pulling a private company into the public markets.

SPACs are currently driving the majority of IPOs in 2020.

As of today, there have been 201 SPAC IPOs in 2020… with an average IPO size of over $345 million. It’s become one of the most popular ways for a private company to go public without taking the traditional IPO route, accounting for almost 50% of IPO activity this year.

Some of the biggest companies in the market all went public using SPACs, like Nikola, DraftKings, and Virgin Galactic. And just recently, used-car sales company Shift merged with Insurance Acquisition Corp. to list on the NASDAQ under the ticker symbol SFT.

With the 10X SPAC, we plan to focus on acquiring high growth technology and tech-enabled businesses in fields like consumer internet, ecommerce, software, healthcare and fintech… some of the world’s most prominent industries.

What makes SPACs such an attractive option for a company trying to go public?

For starters, SPACs are faster and less expensive than a traditional IPO route.

The average cost of an IPO – after you factor in all legal, accounting, underwriting, listing fees, and more – comes out to around $750,000. It usually takes around four to six months to go through the whole process… but can take as long as 18 months in some cases.

In fact, over half of the private companies who decide to take on an IPO end up abandoning the process completely.

But these costs definitely don’t negate the value of going public. Many companies choose to take the plunge into an IPO to rake in massive influxes of cash that can help them grow their business for years to come.

That’s why SPACs can be such a valuable vehicle for companies looking to list on the public market without wasting thousands of dollars and months of their time.

And even better, SPACs can let investors cash in quicker than going the traditional IPO route.

I’m anticipating that we’ll see even more SPAC IPOs and SPAC mergers as we move forward, especially as even more high-profile companies choose to take the SPAC route.

In fact, I really think that the 2020 SPAC boom will likely transform the way companies choose to go public and raise capital for years to come.

As angel investors, it’s becoming more and more likely that one day, some of our portfolio companies may in fact go public using a SPAC.

All in all, in the wake of my own exciting personal news, I’m even more excited for this type of IPO revolution. I’ll make sure to keep you updated on all the latest SPAC news and need-to-knows moving forward.

Have a great day, and I’ll be back soon with another update.

Very best,

David Weisburd