How do you get into SPACs?

If you’re interested in adding SPACs to your portfolio, it’s possible to buy them through an online brokerage account. Fidelity and Robinhood are two examples of online platforms that offer SPACs to investors. You can also look to an online brokerage account for SPAC ETFs as well.

How much money do you need to start a SPAC?

The costs to set up the SPAC and conduct the first roadshow (pre-IPO) will be around $800,000 USD, with 5.1\% of the planned IPO proceeds as sponsor capital added to that amount. About two thirds of the setup costs need to be paid prior to the IPO, while the last third will be covered from the IPO proceeds.

What is a SPAC opportunity?

A special purpose acquisition company (SPAC) is a company that has no commercial operations and is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring or merging with an existing company.

Can anyone invest in a SPAC?

Investors can invest in SPACs either by selecting individual securities or by investing in a SPAC ETF. Selecting individual SPACs allows investors to focus on the opportunities that seem most promising while also having some downside protection due to the structure of SPACs.

Is it worth investing in a SPAC?

SPAC investing has been less profitable for individual investors. Most SPACs underperform the stock market and eventually fall below the IPO price. Given SPAC’s poor track record, most investors should be wary of investing in them, unless they focus their investing on pre-acquisition SPACs.

Why are SPACs attractive to investors?

Investors find SPACs compelling because of the limited downside and yield. The capital raised in a SPAC IPO stays in a trust and is often invested in short-term U.S. Treasuries until a merger with the targeted company, so an investor can redeem common shares for their principal investment plus accrued interest.

How does a SPAC make money?

SPACs raise capital to make an acquisition through an initial public offering. A typical SPAC IPO structure consists of a Class A common stock share combined with a warrant. A warrant gives the holder the right to buy more stock at a fixed price at a later date.