Over 66 SPACs were raised in 2020, according to PitchBook, up from 30 in 2019, amid a year of uncertainty that opened tech companies' eyes to an IPO alternative
Shakeel Hashim / Protocol : Tweets: @hkanji Tweets: Hussein Kanji / @hkanji : Next year could therefore determine whether SPACs stick around as part of the going-public arsenal, or if they're relegated once more to an option only for the least-attractive companies https://www.protocol.com/...
Context & Ripple Effects
By late 2020 the SPAC had already been repositioning itself: an August analysis argued the surge was delivering better terms and a lower cost of capital for target companies precisely because underpricing in traditional IPOs was worsening. PitchBook's count — more than 66 SPACs raised in 2020 versus 30 in 2019 — turned that argument into data, and Hussein Kanji framed 2021 as the test of whether SPACs would become a permanent part of the going-public arsenal or retreat to being a home for the least-attractive companies.
The corpus answers that question in both directions. SPAC issuance peaked in March 2021 with over $36B raised, then ran dry — July 2022 became the first month in five years with no new SPAC money raised. What happened in between explains why.
First-order effects
- Tech companies weighing an exit gained a second route to public markets at the moment they needed one, with sponsors competing to offer targets improved terms.
- SPAC sponsors captured a wave of new capital in 2020–early 2021, raising the stakes on their ability to find targets that could justify public valuations.
Second-order effects
- Competition from SPACs pressured the traditional IPO process on pricing, since targets could now point to sponsor terms when negotiating with underwriters.
- As deal flow outran target quality, nearly half of sub-$10M-revenue startups that went public via SPACs in 2021 — mostly tech — missed their earnings or revenue projections, eroding buyer confidence in the vehicle.
Third-order effects
- The quality gap turned structural: at least eight SPAC take-publics filed for bankruptcy after June 2022, almost 100 were spending unsustainably, and 73 traded below $1, which is what shut the issuance window entirely.
- If the pattern holds, SPACs settle back into a niche tool rather than a standing alternative — their viability depends on sponsor discipline in target selection, not just on market uncertainty pushing companies toward them.
The trend: Going-public vehicles cycle with market sentiment: SPACs surged when 2020's uncertainty made the traditional IPO look costly, then collapsed once post-merger performance exposed how thin many targets were.