Blank-check firms are already making a huge comeback, and now, two of the widespread financial industry veterans with a kinship for fintech have joined to enter this on-going trend. Ryan Gilbert, the venture capitalist, and Betsy Z. Cohen, the founder of The Bancorp Bank, have partnered to create a special-purpose acquisition company (SPAC) by name – FTAC Olympus Corp.
FTAC has initiated its public offering on NASDAQ last week and seeks to raise $750 million. In the next two years, it proposes to pick a hopeful fintech startup to give those proceeds to as well as take public.
Gilbert is said to stay as a general partner of Propel Venture Partners, the venture capital arm that BBVA rolled off in 2016 and was co-founded by Gilbert. However, BBVA remains a limited partner in this case. Kasisto, Prosper, and Coinbase are amongst the other fintech Propel have funded.
Gilbert views this opportunity as a logical next step in the financing band. He says, “At Propel, a lot of my focus is on seed and Series A businesses. We’ve seen so many companies grow from the seed stage to be a massive operation. Some are commanding very generous evaluations.”
To speak of Betsy Cohen, she built The Bancorp Bank in 2000 as the first fintech-friendly bank. This firm is known to offer the regulated, federally insured banking services behind disruptors such as Chime, PayPal, and Betterment. Cohen and Gilbert are the newest executives to build a SPAC that lets founders rapidly increase capital to buy current businesses and platforms rather than create them from scratch.
Cohen reveals that building a SPAC is another way to assist the fintech segment. She says, “We have seen many fintechs scale their businesses, grow their products, become part of an ecosystem, and develop in different ways. I thought enough was enough.”
She adds, “I loved my companies and could see on a going-forward basis there would be many that would succeed and many that would fail. I thought another approach to the industry might be to try to identify those companies that had come to a level of maturity where they could make a transition from being a private company to being a public company and have greater access to capital. I looked for a structure that was not as market-timing-sensitive as an IPO so that I could be helpful to these companies.”
Founders use their age-old experiences and track records to sell investors on their vision and aptitude to select a dependable target firm. The trend comprises FinTech Acquisition Corp. III, which later merged with Paya, the commerce tech provider. Another example is Ribbit Capital, one of the prominent investors in fintech startups consisting of cryptocurrency and blockchain ventures, announced seeking to raise $350 million for a SPAC that would make fintech procurements.
In the meantime, SPAC, with ties to former House Speaker Paul Ryan, has appeared. Besides, Megalith Acquisition, in recent times, settled to buy BankMobile from Customers Bancorp. This deal comprises firms with ties to Customers Chairman and CEO Jay Sidhu.
After a blank-check firm is set up, as FTAC Olympus was on last week, the managers are given 24 months to identify an acquisition. With the SPAC shareholders’ acceptance, the resources of the target company, and the SPAC will be combined, there will be an exchange of stock, and the picked startup will become a public organization.
SPACs in the U.S had already raised $23.6 billion this year, as per Refinitiv. Stessa Cohen, the consultant at PivotAssets, told the emergence of SPACs in the fintech sector is a sign of its maturity. She states, “It’s just another aspect of that hunger for what fintechs are doing. How do you bottle it and how do you make it available, because really isn’t that what it’s there for?”