Revolution.Aero Town Hall: SPACs – from fringe concept to Wall Street

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“In 12-24 months, it went from being a fringe concept to mainstream Wall Street,” said Cyrus Sigari, co-founder and managing partner, UP.Partners, at the latest Revolution.Aero virtual Town Hall.  

Special Purpose Acquisition Companies (SPACs) have significantly reduced the risk of business failure, he said. “SPACs and access to the public markets have provided a much bigger parachute for these new technology companies out there launching.” In the long term, Sigari said SPACs are really good for the market.

With a lot of the SPAC buzz revolving around the eVTOL developers such as Joby and Archer recently, Sigari said key enabling technologies – such as propulsion systems and autonomous software in aviation should not be forgotten. “They are just not showing up as obvious aviation-related things.”

He also outlined the importance of big aviation companies such as Boeing and JetBlue partnering with these developers. This will “pull investment dollars into the infrastructure and key enabling technologies”.

High competition among early-stage investors has made this an ideal time to be a start-up. “This might possibly be the most incredible time to be a start-up founder,” said Sigari.

He attributed this to a “a couple trillion dollars in banking accounts today that weren’t there a year or two ago”, as well as the potential for inflation that has made people more interested in owning assets than cash.

Areas to watch are software and deep tech solutions. Sensing technologies – Light Detection and Ranging (LIDAR) and sensor fusion – will also see some big investment opportunities, according to him.

Amy Burr, MD, Operations & Partnerships, agreed, saying that the sector moves closer to certification as more SPAC deals and money enter the space. “The more the public sees this as a norm, the more people will fly in them. I do think that we’ll be flying by 2024 – albeit at a smaller scale.”

Dean Donovan, MD, DiamondStream Partners said there was a shortage of capital in many parts of the early-stage aviation market.

“There are parts of it which are hugely over competed, where the traditional venture capitalists feel comfortable. But there are a lot of parts where they are not comfortable. And the networks don’t reach very well,” said Donovan.

However, he said SPACs would ebb and flow. “There are going to be some spectacular failures. But the underlying momentum that the SPACs create is going to be very positive for the industry,” he added. 

Beckett Jackson, investing director, Boeing HorizonX Ventures and Hooman Yazhari, founding partner, Mobility Capital were the other panellists at the Town Hall, streamed live on April 6th, 2021. Find the full webinar below:

 Meanwhile, Revolution.Aero is staging a special Town Hall next Tuesday (April 13th) dedicated to intellectual property, patents and protecting ideas for manufacturers. This follows Archer’s denial of allegations of theft of trade secrets and patent infringement made by Wisk.