Analysis: at least eight companies that went public via SPACs filed for bankruptcy since June 2022, almost 100 are spending unsustainably, and 73 trade below $1
Bloomberg : Tweets: @mattzeitlin , @carlquintanilla , @herbgreenberg , @hkanji , and @thestalwart Tweets: Matthew Zeitlin / @mattzeitlin : If we scrapped the accredited investor rules, it's not like the newly empowered retail investor all of the sudden is seeing Sequoia's deal flow, instead a bunch of companies would pop up specifically to steal retail money https://twitter.com/... Carl Quintanilla / @carlquintanilla : “.. a growing number of ventures that went public [via SPAC] have gone bankrupt, highlighting how speculative the SPAC game could be. .. ‘The value destruction has been spectacular.’” @business @TheStalwart https://www.bloomberg.com/... Herb Greenberg / @herbgreenberg : Delistings, bankruptcies. Summed up: “There was nowhere near that number of viable private companies ready for the public markets.” On the flip side: A bunch of assets that can be bought on the cheap. https://www.bloomberg.com/... Hussein Kanji / @hkanji : I am shocked, just shocked https://www.bloomberg.com/... Joe Weisenthal / @thestalwart : I've said before, that my inclination is to get rid of “accredited investor” rules WRT startups. But I think just in terms of outcomes, the SPAC mania/aftermath is a pretty good look at how most retail VC investors will fare https://www.bloomberg.com/...
Context & Ripple Effects
The Bloomberg tally closes a loop that opened two years earlier: SPAC IPOs peaked in March 2021 with over $36 billion raised, then July 2022 marked the first month in five years with zero new SPACs as the issuance window slammed shut. What followed was predictable from the quality of the cohort — by February 2022, [[a:976377|nearly half of sub-$10M-revenue startups that had gone public via SPACs were already missing their targets]], and Clover Health and other Palihapitiya-sponsored vehicles were down 50% on average within months of the peak.
Today's numbers convert those early warning signs into balance-sheet outcomes: eight bankruptcies since June 2022, almost 100 companies spending unsustainably, and 73 stocks below $1. The structural enabler was always regulatory — because a SPAC merger counts as a merger rather than an offering, sponsors faced fewer restrictions on promoting the stock than a traditional IPO's quiet period allows, which is precisely why the debate now turns to accredited-investor rules and how much of this losses retail holders absorb.
First-order effects
- The eight bankrupt companies face delisting and creditor proceedings while the 73 sub-$1 names confront reverse-split-or-delist decisions, forcing boards into survival restructuring rather than growth plans.
- Retail investors who bought at the merger stage — courted under the looser promotion rules SPACs enjoy versus traditional IPOs — bear the realized losses, which is the exact outcome Weisenthal and Zeitlin cite when questioning whether scrapping accredited-investor rules would actually widen access to quality deal flow.
Second-order effects
- Sponsor economics collapse alongside the stocks: with no new SPACs raising money since mid-2022, promoters like Palihapitiya have lost the incentive structure that made the 2021 wave possible, and remaining blank-check vehicles struggle to find credible merger targets.
- Private late-stage startups lose the SPAC exit path entirely, pushing them toward traditional IPOs, sales, or down rounds — and shifting scrutiny onto the earnings credibility of whatever goes public next.
Third-order effects
- If the bankruptcy-and-sub-dollar pattern keeps running through the 2021 vintage, expect regulators to revisit the asymmetry that let SPAC mergers bypass quiet-period disclosure discipline, tightening the merger route that made this cohort possible.
- The broader structural lesson — that loosened retail-access channels tend to surface low-quality issuers rather than elite deal flow, as Kanji argues — will shape how any future retail-investment liberalization is designed, likely keeping accredited-investor gates intact.
The trend: The 2021 SPAC wave is completing its full cycle from record issuance through value destruction to insolvency, converting a fundraising mania into a case study for tighter retail-offering regulation.