FoodTech IPOs and SPACs Explained: How it works, who's doing it and why?

FoodTech IPOs and SPACs Explained: How it works, who's doing it and why?

By
Sam Panzer
June 21, 2021

2021: The year of the SPACs 👀

That just might be the title of a future book chapter, explaining what the heck was going on in the economy this decade.

It has indeed been a wild ride for companies going public this year. In addition to the “traditional” IPO route (like Oatly or Deliveroo), we’ve now seen hundreds of companies go public via a Special Purpose Acquisition Company (SPAC). 

SPACs are a ‘backdoor’ way to take a company public. Instead of filing to go public, companies can instead be acquired by a publicly-traded company (the SPAC) that exists exclusively to acquire a company. The SPAC process cuts a lot of corners and helps smaller companies go public, fast.

SPACs aren’t new, just trendy. They now make up nearly two thirds of all IPOs, and are particularly popular in agtech and in foodtech companies with high R&D or expansion costs.

Things got chilly for SPACs in April and May after the United States SEC raised some red flags, but SPAC IPOs appear to be picking back up. The rest of 2021 will see a few blockbuster IPOs via SPAC (especially in the 🔥 space that is indoor farming), so read on to see what’s coming and learn how these things work.

Let's ring that bell 🔔

📈 By the Numbers: IPOs & SPACs

  • At $171B, IPOs in the USA already hit an annual record this year, up from $168B in 2020. That’s an all-time high in only 6 months
  • Of those IPOs, SPACs powered 339, accounting for 61% ($105B) of IPOs to-date.
  • However, SPAC volume has plummeted in the last few weeks, with the 4-week rolling volume of SPAC IPOs decreasing by over 80% in April (down to < 20 from 120+). June appears to be picking back up.
  • In one of the marquee FoodTech SPACs, grocery delivery platform Boxed plans to go public via SPAC on a valuation around $900M.
An overview of FoodTech's  current, future and rumoured IPOs & SPACs

🤷 What: How does an IPOs work?

Let’s take a look at the “traditional” IPO process, which can be broken down into five phases:

1. Exploration 🔎 A company decides to IPO and starts looking for underwriters, sometimes privately, sometimes publicly. The underwriter is usually a big investment bank (Citigroup, Goldman Sachs, Credit Suisse) that determines the initial price, then manages the actual buying and selling of the stock. 

2. File with the feds 📁 The company files their interest to the relevant marketplace (i.e. NYSE). The specific filing depends on the country of the exchange. In the US, it’s an “S-1” filed with the Series & Exchange Committee (SEC). 

3. Opening day! 🔔 Stocks open for trading to the public. The capital from the IPO is received as cash (“stockholder’s equity”), and anybody can buy and sell the issued shares of the stock.

4. Spend. That. Cash 💸 All the share value of an IPO come to the company as cash. But a few billion on the balance sheet can be a major tax liability (and money at rest is money lost). Companies usually pay back their debts and buy new assets quickly after their IPO.

5. Uncage the Early Birds 🔓The underwriter often requires stock transferred from early shareholders be “locked up” for a period, usually 90-180 days. That means early investors and founders often can’t ‘cash out’ for a few months post-IPO. Once they’re freed, the share price usually dips.

This all takes 12-18 months and runs up a cool $750K tab, and brings a ton of financial scrutiny from the underwriter, government, and media. The company also typically has to reconfigure management, creating or expanding a board of directors.

🤔 What about SPACs?

SPACs are like an IPO in reverse: a “shell” company with no assets or revenue goes public via an IPO, then acquires an actual company (with staff, product, revenue, etc). Here’s the spiel, slowed down:

First, investors establish a new company (the SPAC) with no products or assets, and fill ‘er up with cash. SPACs are sometimes founded by high-profile investors or celebrities, like Shaquille O’Neal (yep, Shaq’s got a SPAC). 

Why the star power? Because the SPAC needs people to invest before acquiring anything. The SPAC raises its money based on the promise of the founding team, often specifying their target industry that’s aligned with whoever is leading the SPAC.

Second, the newly-minted SPAC goes public. Being basically a giant swimming pool of money, the IPO process is pretty quick. 

Third, the now-public company searches for its target company. Once they find it, they announce it and do a big media blitz to hype the deal. The deal must be approved by the SPAC’s shareholders. 

Fourth, if approved, the company is acquired by the SPAC and immediately becomes a publicly-traded company as part of the parent SPAC. This kicks off the de-SPAC phase where the original SPAC dissolves, and only the target company is left.  

If the deal is rejected, the SPAC either finds a new one or liquidates and returns its founding money to shareholders (with interest)

SPACs simplified

👍 SPACs: The Good 

⚡️ Speed SPACs are, above all else, a much faster way to go public (usually 2-4 months faster than an IPO). That means SPAC-listed companies get cash on hand, fast.

🐣 Smaller companies get to IPO. There are great companies that can’t go public due to cost, timeline, company value, or other resources. SPACs tend to help innovative, smaller companies that need the R&D or equipment cash (that’s why they’re especially popular with market-validated but early-stage.

🤝 Small-time investors are let in on the action. SPACs let small-time investors invest in the SPAC before or after its acquisition is announced (and made official), effectively letting them participate in an IPO.

👍 SPACs: The Bad 

👀 Speculative valuation. There’s no uniformity in how SPAC acquisitions report their financials. It’s typical for SPACs to include financial projections, whereas IPOs are more focused on cash flows and assets on hand. That means SPAC IPOs are valued and priced at unimaginable rates for conventional IPOs –– often over 100x the company’s revenue even while they operate at loss.

🗑️ Junk stocks
. There’s little doubt that some IPOs via SPAC listed companies with weak (or even fraudulent) financials. While the early investors and founders get to cash in big, other later-stage investors are left in the cold without a real chance to understand the stock’s risk.

⭐️ Reliance on star power
. Being a movie star or pro athlete does not make you a disciplined finance whizz. In fact, the SEC issued a warning about relying on celebrity-backed SPACs. It’s also worth noting that the “Sponsor” of a SPAC gets a 20% stake in the SPAC for very little work (and sometimes no investment). 

👮 Regulation inbound
. Speaking of the feds… It’s widely believed that the SEC and other government bodies will soon crack down on SPACs, restricting their ability to assess valuations based on future revenue and changing how the “equity” in a SPAC is handled. The SPAC slowdown in April was a response to the SEC firing a warning shot via a few letters. More to come.

A big day for plant-based. Beyond Meat's (BYND) public debut in May 2020.

Sponsored by ProVeg Incubator

Accelerator today, IPO tomorrow 🚀

We get it, you're probably reading this newsletter and picturing the day your company IPO's and you're the one up there ringing that bell. But ​hold on a minute, it's a long road there, and you're probably going to need some help to get your business ready for the big day.

That's where Proveg Incubator can help. Founders developing innovative alternatives to animal-based products, ingredients, and services can apply now to join the incubators next cohort of startups.

Attending startups get up to €200,000 in funding, benefit from a global network of industry insiders and expert mentors, access to a co-working space & test kitchen, plus join an active alumni community of plant-based innovators (and future public companies?).

Apply today, accelerate tomorrow, IPO later. Deadline to apply: July 18th.


🔔 Who: Recent IPOs in FoodTech

  • Oatly (Conventional IPO): since going public in May at $20.20 per share, Oatly stock has continued to grow, now around $26 per share. However, it’s hard to argue why a company in a crowded space like oat milk should be valued at over 33x its revenue.
  • Deliveroo (Conventional IPO): the March IPO proved to be “the worst IPO in London’s history,” with stock prices falling for a month after the opening bell. Why the fall? Deliveroo’s IPO had been majorly hyped in the press, but once investors realized their slim chance of profitability and poor scalability, the stock took a tumble.
  • AppHarvest (IPO via SPAC): after their February SPAC listing, the indoor farming startup reported a mere $2.3M revenue in their first public quarter, crashing the stock price to a low of 67% under opening price. Still trading at 800x revenue, we’ll see if AppHarvest can climb back up. 

👀  Who: Upcoming FoodTech IPOs

  • NotCo: Chilean plant-based meat and dairy company NotCo is eyeing a valuation north of $1B, which would make it Chile’s first unicorn.
  • DingDong: the Shanghai-based delivery app is going public in the US with a valuation over $6B.
  • Missfresh: the Chinese eGrocery is planning a Nasdaq listing later this year. With net losses of $93M (and sales of $236M), Missfresh’s IPO will be a great test if grocery delivery can perform on the markets without a profitable model.
  • Impossible: the alt-meat giant is exploring both a traditional IPO and a SPAC, sure to draw plenty of comparisons with Beyond, whose 2019 IPO was among the most successful of all time.
  • Instacart: while their last fundraising round this spring valued Instacart at $39B, their IPO could include valuation over $50B. Instacart is considering a “direct listing,” where they simply sell existing shares on the open market without involving underwriters or bankers.
  • AllMarket Inc (Owner of VitaCoco): after seeing the blockbuster Oatly IPO, VitaCoco’s owner is seeking an IPO with valuation over $2B.

👀  Who: Upcoming FoodTech SPAC IPOs

  • Local Bounti (Leo Holdings III Corp): indoor farming Local Bounti is pursuing a SPAC IPO later this year at a $1.1B equity valuation. They’ll use the cash to expand rapidly through the Western US.
  • Boxed (Seven Oaks Acquisition Corp): a $900M valuation will bring over $300M in cash to the eGrocery platform, expected in Q4 2021.
  • Grab (Altimeter Growth Corp): pending shareholder approval, the Southeast Asian food delivery platform is eyeing a $39.6B valuation after their SPAC IPO. They aim to raise $500M via the IPO.
  • Ginkgo Bioworks (Soaring Eagle Acquisition): the biotech bacteria startup is preparing for their SPAC IPO on a $17.5B valuation later this year.
  • Infarm (seeking SPAC): the vertical farming startup is working with Goldman Sachs to explore a SPAC IPO on a valuation over $1B.
  • Grofers (seeking SPAC): the Indian eGrocery startup is seeking a SPAC partner after a previous acquisition talk fell through. Target valuation: $1B. 
  • Aerofarms (Spring Valley Acquisition): another indoor farming startup taking the SPAC route, on an estimated $1.2B valuation bringing in over $300M in cash.
  • Benson Hill (Star Peak Corp II): crop improvement agtech startup is preparing to go public on a $1.35B valuation in Q3 2021.

💰 Who: Sample SPACs

While there are several SPACs that make a lot of noise from inception with celebrity messaging and extensive branding, many SPACs are relatively quiet prior to announcing their target company. Here are a few examples to illustrate different profiles of SPACs.

Other SPACs seeking to go public or now looking for a target company in the foodtech space include HumanCo Acquisition, Aspirational Consumer Lifestyle Corp, Novus Capital Corporation, GreenVision Acquisition Corp, Sustainable Development Acquisition I Corp (SDAC), and TPB Acquisition.

Welcome aboard the IPO train Oatly. We're headed uptown 📈

🔮 Predictions: What comes next?

Yes, SPACs are overheated and overhyped, but we don’t necessarily see a bubble bursting all at once.

What will likely happen is that the SEC (and similar regulators in other countries) will step in and force SPAC IPOs to behave more like traditional IPOs. That means better financial reporting and less speculation of the target company’s value.

Will this regulation be enough to ruin the whole party? We’ll see. We’ve already seen the chilling effect on SPACs of the SEC simply looking into the matter, and expect similar downturns whenever new regulation is considered.

We do hope that regulators target SPAC Sponsors, who are virtually guaranteed a major return (average 400%) even if the company flops on the open market. It’s a major incentive for bad-faith celebrities and investors to make a fortune while misleading the public.

In foodtech, SPACs will remain a popular avenue for industries like indoor farming or alt-dairy that can be profitable, but only with a huge initial investment.

Take Infarm, for example. Their indoor greenhouses are placed and harvested in grocery stores, and grow high-margin herbs and salad greens with minimal intervention. Once they’re there, the growers practically print cash –– but such equipment (with temp, humidity, and light control) is very expensive and hard to assemble. Infarm therefore needs huge checks to grow faster than their (ample) competition, and to offer the equipment to grocery stores at a lower price than building in-house.

So for a proven, viable business with high up-front costs, SPACs are a good fit –- and will remain a great option to get IPO capital, faster and easier than the conventional IPO avenue.

This SPAC-ability may apply to cutting-edge tech like cultured meat or precision fermentation, which are facing massive challenges in building or acquiring facilities. We are less optimistic about SPACs in eGrocery, a space that requires tons of capital but (like restaurant delivery before) is largely struggling to reach profitability. All eyes on the upcoming SPAC IPOs for Grab and Boxed, here.

A lot of companies we admire are going to make it big this year via IPO, whether SPAC or traditional.

Some will flop, some will soar. But in any case, we will see startups founded with a more sustainable food system in mind enter the ranks of big, publicly-traded business. As a planet-loving pragmatist, I can’t wait 🔔

Boring disclaimer: This is not financial advice and should not be taken as such. This is not intended to serve as the basis for any investment decision, and doing further due diligence on a potential investment is highly recommended. Invest (or don't) into stocks at your own risk.

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2021: The year of the SPACs 👀

That just might be the title of a future book chapter, explaining what the heck was going on in the economy this decade.

It has indeed been a wild ride for companies going public this year. In addition to the “traditional” IPO route (like Oatly or Deliveroo), we’ve now seen hundreds of companies go public via a Special Purpose Acquisition Company (SPAC). 

SPACs are a ‘backdoor’ way to take a company public. Instead of filing to go public, companies can instead be acquired by a publicly-traded company (the SPAC) that exists exclusively to acquire a company. The SPAC process cuts a lot of corners and helps smaller companies go public, fast.

SPACs aren’t new, just trendy. They now make up nearly two thirds of all IPOs, and are particularly popular in agtech and in foodtech companies with high R&D or expansion costs.

Things got chilly for SPACs in April and May after the United States SEC raised some red flags, but SPAC IPOs appear to be picking back up. The rest of 2021 will see a few blockbuster IPOs via SPAC (especially in the 🔥 space that is indoor farming), so read on to see what’s coming and learn how these things work.

Let's ring that bell 🔔

📈 By the Numbers: IPOs & SPACs

  • At $171B, IPOs in the USA already hit an annual record this year, up from $168B in 2020. That’s an all-time high in only 6 months
  • Of those IPOs, SPACs powered 339, accounting for 61% ($105B) of IPOs to-date.
  • However, SPAC volume has plummeted in the last few weeks, with the 4-week rolling volume of SPAC IPOs decreasing by over 80% in April (down to < 20 from 120+). June appears to be picking back up.
  • In one of the marquee FoodTech SPACs, grocery delivery platform Boxed plans to go public via SPAC on a valuation around $900M.
An overview of FoodTech's  current, future and rumoured IPOs & SPACs

🤷 What: How does an IPOs work?

Let’s take a look at the “traditional” IPO process, which can be broken down into five phases:

1. Exploration 🔎 A company decides to IPO and starts looking for underwriters, sometimes privately, sometimes publicly. The underwriter is usually a big investment bank (Citigroup, Goldman Sachs, Credit Suisse) that determines the initial price, then manages the actual buying and selling of the stock. 

2. File with the feds 📁 The company files their interest to the relevant marketplace (i.e. NYSE). The specific filing depends on the country of the exchange. In the US, it’s an “S-1” filed with the Series & Exchange Committee (SEC). 

3. Opening day! 🔔 Stocks open for trading to the public. The capital from the IPO is received as cash (“stockholder’s equity”), and anybody can buy and sell the issued shares of the stock.

4. Spend. That. Cash 💸 All the share value of an IPO come to the company as cash. But a few billion on the balance sheet can be a major tax liability (and money at rest is money lost). Companies usually pay back their debts and buy new assets quickly after their IPO.

5. Uncage the Early Birds 🔓The underwriter often requires stock transferred from early shareholders be “locked up” for a period, usually 90-180 days. That means early investors and founders often can’t ‘cash out’ for a few months post-IPO. Once they’re freed, the share price usually dips.

This all takes 12-18 months and runs up a cool $750K tab, and brings a ton of financial scrutiny from the underwriter, government, and media. The company also typically has to reconfigure management, creating or expanding a board of directors.

🤔 What about SPACs?

SPACs are like an IPO in reverse: a “shell” company with no assets or revenue goes public via an IPO, then acquires an actual company (with staff, product, revenue, etc). Here’s the spiel, slowed down:

First, investors establish a new company (the SPAC) with no products or assets, and fill ‘er up with cash. SPACs are sometimes founded by high-profile investors or celebrities, like Shaquille O’Neal (yep, Shaq’s got a SPAC). 

Why the star power? Because the SPAC needs people to invest before acquiring anything. The SPAC raises its money based on the promise of the founding team, often specifying their target industry that’s aligned with whoever is leading the SPAC.

Second, the newly-minted SPAC goes public. Being basically a giant swimming pool of money, the IPO process is pretty quick. 

Third, the now-public company searches for its target company. Once they find it, they announce it and do a big media blitz to hype the deal. The deal must be approved by the SPAC’s shareholders. 

Fourth, if approved, the company is acquired by the SPAC and immediately becomes a publicly-traded company as part of the parent SPAC. This kicks off the de-SPAC phase where the original SPAC dissolves, and only the target company is left.  

If the deal is rejected, the SPAC either finds a new one or liquidates and returns its founding money to shareholders (with interest)

SPACs simplified

👍 SPACs: The Good 

⚡️ Speed SPACs are, above all else, a much faster way to go public (usually 2-4 months faster than an IPO). That means SPAC-listed companies get cash on hand, fast.

🐣 Smaller companies get to IPO. There are great companies that can’t go public due to cost, timeline, company value, or other resources. SPACs tend to help innovative, smaller companies that need the R&D or equipment cash (that’s why they’re especially popular with market-validated but early-stage.

🤝 Small-time investors are let in on the action. SPACs let small-time investors invest in the SPAC before or after its acquisition is announced (and made official), effectively letting them participate in an IPO.

👍 SPACs: The Bad 

👀 Speculative valuation. There’s no uniformity in how SPAC acquisitions report their financials. It’s typical for SPACs to include financial projections, whereas IPOs are more focused on cash flows and assets on hand. That means SPAC IPOs are valued and priced at unimaginable rates for conventional IPOs –– often over 100x the company’s revenue even while they operate at loss.

🗑️ Junk stocks
. There’s little doubt that some IPOs via SPAC listed companies with weak (or even fraudulent) financials. While the early investors and founders get to cash in big, other later-stage investors are left in the cold without a real chance to understand the stock’s risk.

⭐️ Reliance on star power
. Being a movie star or pro athlete does not make you a disciplined finance whizz. In fact, the SEC issued a warning about relying on celebrity-backed SPACs. It’s also worth noting that the “Sponsor” of a SPAC gets a 20% stake in the SPAC for very little work (and sometimes no investment). 

👮 Regulation inbound
. Speaking of the feds… It’s widely believed that the SEC and other government bodies will soon crack down on SPACs, restricting their ability to assess valuations based on future revenue and changing how the “equity” in a SPAC is handled. The SPAC slowdown in April was a response to the SEC firing a warning shot via a few letters. More to come.

A big day for plant-based. Beyond Meat's (BYND) public debut in May 2020.

Sponsored by ProVeg Incubator

Accelerator today, IPO tomorrow 🚀

We get it, you're probably reading this newsletter and picturing the day your company IPO's and you're the one up there ringing that bell. But ​hold on a minute, it's a long road there, and you're probably going to need some help to get your business ready for the big day.

That's where Proveg Incubator can help. Founders developing innovative alternatives to animal-based products, ingredients, and services can apply now to join the incubators next cohort of startups.

Attending startups get up to €200,000 in funding, benefit from a global network of industry insiders and expert mentors, access to a co-working space & test kitchen, plus join an active alumni community of plant-based innovators (and future public companies?).

Apply today, accelerate tomorrow, IPO later. Deadline to apply: July 18th.


🔔 Who: Recent IPOs in FoodTech

  • Oatly (Conventional IPO): since going public in May at $20.20 per share, Oatly stock has continued to grow, now around $26 per share. However, it’s hard to argue why a company in a crowded space like oat milk should be valued at over 33x its revenue.
  • Deliveroo (Conventional IPO): the March IPO proved to be “the worst IPO in London’s history,” with stock prices falling for a month after the opening bell. Why the fall? Deliveroo’s IPO had been majorly hyped in the press, but once investors realized their slim chance of profitability and poor scalability, the stock took a tumble.
  • AppHarvest (IPO via SPAC): after their February SPAC listing, the indoor farming startup reported a mere $2.3M revenue in their first public quarter, crashing the stock price to a low of 67% under opening price. Still trading at 800x revenue, we’ll see if AppHarvest can climb back up. 

👀  Who: Upcoming FoodTech IPOs

  • NotCo: Chilean plant-based meat and dairy company NotCo is eyeing a valuation north of $1B, which would make it Chile’s first unicorn.
  • DingDong: the Shanghai-based delivery app is going public in the US with a valuation over $6B.
  • Missfresh: the Chinese eGrocery is planning a Nasdaq listing later this year. With net losses of $93M (and sales of $236M), Missfresh’s IPO will be a great test if grocery delivery can perform on the markets without a profitable model.
  • Impossible: the alt-meat giant is exploring both a traditional IPO and a SPAC, sure to draw plenty of comparisons with Beyond, whose 2019 IPO was among the most successful of all time.
  • Instacart: while their last fundraising round this spring valued Instacart at $39B, their IPO could include valuation over $50B. Instacart is considering a “direct listing,” where they simply sell existing shares on the open market without involving underwriters or bankers.
  • AllMarket Inc (Owner of VitaCoco): after seeing the blockbuster Oatly IPO, VitaCoco’s owner is seeking an IPO with valuation over $2B.

👀  Who: Upcoming FoodTech SPAC IPOs

  • Local Bounti (Leo Holdings III Corp): indoor farming Local Bounti is pursuing a SPAC IPO later this year at a $1.1B equity valuation. They’ll use the cash to expand rapidly through the Western US.
  • Boxed (Seven Oaks Acquisition Corp): a $900M valuation will bring over $300M in cash to the eGrocery platform, expected in Q4 2021.
  • Grab (Altimeter Growth Corp): pending shareholder approval, the Southeast Asian food delivery platform is eyeing a $39.6B valuation after their SPAC IPO. They aim to raise $500M via the IPO.
  • Ginkgo Bioworks (Soaring Eagle Acquisition): the biotech bacteria startup is preparing for their SPAC IPO on a $17.5B valuation later this year.
  • Infarm (seeking SPAC): the vertical farming startup is working with Goldman Sachs to explore a SPAC IPO on a valuation over $1B.
  • Grofers (seeking SPAC): the Indian eGrocery startup is seeking a SPAC partner after a previous acquisition talk fell through. Target valuation: $1B. 
  • Aerofarms (Spring Valley Acquisition): another indoor farming startup taking the SPAC route, on an estimated $1.2B valuation bringing in over $300M in cash.
  • Benson Hill (Star Peak Corp II): crop improvement agtech startup is preparing to go public on a $1.35B valuation in Q3 2021.

💰 Who: Sample SPACs

While there are several SPACs that make a lot of noise from inception with celebrity messaging and extensive branding, many SPACs are relatively quiet prior to announcing their target company. Here are a few examples to illustrate different profiles of SPACs.

Other SPACs seeking to go public or now looking for a target company in the foodtech space include HumanCo Acquisition, Aspirational Consumer Lifestyle Corp, Novus Capital Corporation, GreenVision Acquisition Corp, Sustainable Development Acquisition I Corp (SDAC), and TPB Acquisition.

Welcome aboard the IPO train Oatly. We're headed uptown 📈

🔮 Predictions: What comes next?

Yes, SPACs are overheated and overhyped, but we don’t necessarily see a bubble bursting all at once.

What will likely happen is that the SEC (and similar regulators in other countries) will step in and force SPAC IPOs to behave more like traditional IPOs. That means better financial reporting and less speculation of the target company’s value.

Will this regulation be enough to ruin the whole party? We’ll see. We’ve already seen the chilling effect on SPACs of the SEC simply looking into the matter, and expect similar downturns whenever new regulation is considered.

We do hope that regulators target SPAC Sponsors, who are virtually guaranteed a major return (average 400%) even if the company flops on the open market. It’s a major incentive for bad-faith celebrities and investors to make a fortune while misleading the public.

In foodtech, SPACs will remain a popular avenue for industries like indoor farming or alt-dairy that can be profitable, but only with a huge initial investment.

Take Infarm, for example. Their indoor greenhouses are placed and harvested in grocery stores, and grow high-margin herbs and salad greens with minimal intervention. Once they’re there, the growers practically print cash –– but such equipment (with temp, humidity, and light control) is very expensive and hard to assemble. Infarm therefore needs huge checks to grow faster than their (ample) competition, and to offer the equipment to grocery stores at a lower price than building in-house.

So for a proven, viable business with high up-front costs, SPACs are a good fit –- and will remain a great option to get IPO capital, faster and easier than the conventional IPO avenue.

This SPAC-ability may apply to cutting-edge tech like cultured meat or precision fermentation, which are facing massive challenges in building or acquiring facilities. We are less optimistic about SPACs in eGrocery, a space that requires tons of capital but (like restaurant delivery before) is largely struggling to reach profitability. All eyes on the upcoming SPAC IPOs for Grab and Boxed, here.

A lot of companies we admire are going to make it big this year via IPO, whether SPAC or traditional.

Some will flop, some will soar. But in any case, we will see startups founded with a more sustainable food system in mind enter the ranks of big, publicly-traded business. As a planet-loving pragmatist, I can’t wait 🔔

Boring disclaimer: This is not financial advice and should not be taken as such. This is not intended to serve as the basis for any investment decision, and doing further due diligence on a potential investment is highly recommended. Invest (or don't) into stocks at your own risk.

2021: The year of the SPACs 👀

That just might be the title of a future book chapter, explaining what the heck was going on in the economy this decade.

It has indeed been a wild ride for companies going public this year. In addition to the “traditional” IPO route (like Oatly or Deliveroo), we’ve now seen hundreds of companies go public via a Special Purpose Acquisition Company (SPAC). 

SPACs are a ‘backdoor’ way to take a company public. Instead of filing to go public, companies can instead be acquired by a publicly-traded company (the SPAC) that exists exclusively to acquire a company. The SPAC process cuts a lot of corners and helps smaller companies go public, fast.

SPACs aren’t new, just trendy. They now make up nearly two thirds of all IPOs, and are particularly popular in agtech and in foodtech companies with high R&D or expansion costs.

Things got chilly for SPACs in April and May after the United States SEC raised some red flags, but SPAC IPOs appear to be picking back up. The rest of 2021 will see a few blockbuster IPOs via SPAC (especially in the 🔥 space that is indoor farming), so read on to see what’s coming and learn how these things work.

Let's ring that bell 🔔

📈 By the Numbers: IPOs & SPACs

  • At $171B, IPOs in the USA already hit an annual record this year, up from $168B in 2020. That’s an all-time high in only 6 months
  • Of those IPOs, SPACs powered 339, accounting for 61% ($105B) of IPOs to-date.
  • However, SPAC volume has plummeted in the last few weeks, with the 4-week rolling volume of SPAC IPOs decreasing by over 80% in April (down to < 20 from 120+). June appears to be picking back up.
  • In one of the marquee FoodTech SPACs, grocery delivery platform Boxed plans to go public via SPAC on a valuation around $900M.
An overview of FoodTech's  current, future and rumoured IPOs & SPACs

🤷 What: How does an IPOs work?

Let’s take a look at the “traditional” IPO process, which can be broken down into five phases:

1. Exploration 🔎 A company decides to IPO and starts looking for underwriters, sometimes privately, sometimes publicly. The underwriter is usually a big investment bank (Citigroup, Goldman Sachs, Credit Suisse) that determines the initial price, then manages the actual buying and selling of the stock. 

2. File with the feds 📁 The company files their interest to the relevant marketplace (i.e. NYSE). The specific filing depends on the country of the exchange. In the US, it’s an “S-1” filed with the Series & Exchange Committee (SEC). 

3. Opening day! 🔔 Stocks open for trading to the public. The capital from the IPO is received as cash (“stockholder’s equity”), and anybody can buy and sell the issued shares of the stock.

4. Spend. That. Cash 💸 All the share value of an IPO come to the company as cash. But a few billion on the balance sheet can be a major tax liability (and money at rest is money lost). Companies usually pay back their debts and buy new assets quickly after their IPO.

5. Uncage the Early Birds 🔓The underwriter often requires stock transferred from early shareholders be “locked up” for a period, usually 90-180 days. That means early investors and founders often can’t ‘cash out’ for a few months post-IPO. Once they’re freed, the share price usually dips.

This all takes 12-18 months and runs up a cool $750K tab, and brings a ton of financial scrutiny from the underwriter, government, and media. The company also typically has to reconfigure management, creating or expanding a board of directors.

🤔 What about SPACs?

SPACs are like an IPO in reverse: a “shell” company with no assets or revenue goes public via an IPO, then acquires an actual company (with staff, product, revenue, etc). Here’s the spiel, slowed down:

First, investors establish a new company (the SPAC) with no products or assets, and fill ‘er up with cash. SPACs are sometimes founded by high-profile investors or celebrities, like Shaquille O’Neal (yep, Shaq’s got a SPAC). 

Why the star power? Because the SPAC needs people to invest before acquiring anything. The SPAC raises its money based on the promise of the founding team, often specifying their target industry that’s aligned with whoever is leading the SPAC.

Second, the newly-minted SPAC goes public. Being basically a giant swimming pool of money, the IPO process is pretty quick. 

Third, the now-public company searches for its target company. Once they find it, they announce it and do a big media blitz to hype the deal. The deal must be approved by the SPAC’s shareholders. 

Fourth, if approved, the company is acquired by the SPAC and immediately becomes a publicly-traded company as part of the parent SPAC. This kicks off the de-SPAC phase where the original SPAC dissolves, and only the target company is left.  

If the deal is rejected, the SPAC either finds a new one or liquidates and returns its founding money to shareholders (with interest)

SPACs simplified

👍 SPACs: The Good 

⚡️ Speed SPACs are, above all else, a much faster way to go public (usually 2-4 months faster than an IPO). That means SPAC-listed companies get cash on hand, fast.

🐣 Smaller companies get to IPO. There are great companies that can’t go public due to cost, timeline, company value, or other resources. SPACs tend to help innovative, smaller companies that need the R&D or equipment cash (that’s why they’re especially popular with market-validated but early-stage.

🤝 Small-time investors are let in on the action. SPACs let small-time investors invest in the SPAC before or after its acquisition is announced (and made official), effectively letting them participate in an IPO.

👍 SPACs: The Bad 

👀 Speculative valuation. There’s no uniformity in how SPAC acquisitions report their financials. It’s typical for SPACs to include financial projections, whereas IPOs are more focused on cash flows and assets on hand. That means SPAC IPOs are valued and priced at unimaginable rates for conventional IPOs –– often over 100x the company’s revenue even while they operate at loss.

🗑️ Junk stocks
. There’s little doubt that some IPOs via SPAC listed companies with weak (or even fraudulent) financials. While the early investors and founders get to cash in big, other later-stage investors are left in the cold without a real chance to understand the stock’s risk.

⭐️ Reliance on star power
. Being a movie star or pro athlete does not make you a disciplined finance whizz. In fact, the SEC issued a warning about relying on celebrity-backed SPACs. It’s also worth noting that the “Sponsor” of a SPAC gets a 20% stake in the SPAC for very little work (and sometimes no investment). 

👮 Regulation inbound
. Speaking of the feds… It’s widely believed that the SEC and other government bodies will soon crack down on SPACs, restricting their ability to assess valuations based on future revenue and changing how the “equity” in a SPAC is handled. The SPAC slowdown in April was a response to the SEC firing a warning shot via a few letters. More to come.

A big day for plant-based. Beyond Meat's (BYND) public debut in May 2020.

Sponsored by ProVeg Incubator

Accelerator today, IPO tomorrow 🚀

We get it, you're probably reading this newsletter and picturing the day your company IPO's and you're the one up there ringing that bell. But ​hold on a minute, it's a long road there, and you're probably going to need some help to get your business ready for the big day.

That's where Proveg Incubator can help. Founders developing innovative alternatives to animal-based products, ingredients, and services can apply now to join the incubators next cohort of startups.

Attending startups get up to €200,000 in funding, benefit from a global network of industry insiders and expert mentors, access to a co-working space & test kitchen, plus join an active alumni community of plant-based innovators (and future public companies?).

Apply today, accelerate tomorrow, IPO later. Deadline to apply: July 18th.


🔔 Who: Recent IPOs in FoodTech

  • Oatly (Conventional IPO): since going public in May at $20.20 per share, Oatly stock has continued to grow, now around $26 per share. However, it’s hard to argue why a company in a crowded space like oat milk should be valued at over 33x its revenue.
  • Deliveroo (Conventional IPO): the March IPO proved to be “the worst IPO in London’s history,” with stock prices falling for a month after the opening bell. Why the fall? Deliveroo’s IPO had been majorly hyped in the press, but once investors realized their slim chance of profitability and poor scalability, the stock took a tumble.
  • AppHarvest (IPO via SPAC): after their February SPAC listing, the indoor farming startup reported a mere $2.3M revenue in their first public quarter, crashing the stock price to a low of 67% under opening price. Still trading at 800x revenue, we’ll see if AppHarvest can climb back up. 

👀  Who: Upcoming FoodTech IPOs

  • NotCo: Chilean plant-based meat and dairy company NotCo is eyeing a valuation north of $1B, which would make it Chile’s first unicorn.
  • DingDong: the Shanghai-based delivery app is going public in the US with a valuation over $6B.
  • Missfresh: the Chinese eGrocery is planning a Nasdaq listing later this year. With net losses of $93M (and sales of $236M), Missfresh’s IPO will be a great test if grocery delivery can perform on the markets without a profitable model.
  • Impossible: the alt-meat giant is exploring both a traditional IPO and a SPAC, sure to draw plenty of comparisons with Beyond, whose 2019 IPO was among the most successful of all time.
  • Instacart: while their last fundraising round this spring valued Instacart at $39B, their IPO could include valuation over $50B. Instacart is considering a “direct listing,” where they simply sell existing shares on the open market without involving underwriters or bankers.
  • AllMarket Inc (Owner of VitaCoco): after seeing the blockbuster Oatly IPO, VitaCoco’s owner is seeking an IPO with valuation over $2B.

👀  Who: Upcoming FoodTech SPAC IPOs

  • Local Bounti (Leo Holdings III Corp): indoor farming Local Bounti is pursuing a SPAC IPO later this year at a $1.1B equity valuation. They’ll use the cash to expand rapidly through the Western US.
  • Boxed (Seven Oaks Acquisition Corp): a $900M valuation will bring over $300M in cash to the eGrocery platform, expected in Q4 2021.
  • Grab (Altimeter Growth Corp): pending shareholder approval, the Southeast Asian food delivery platform is eyeing a $39.6B valuation after their SPAC IPO. They aim to raise $500M via the IPO.
  • Ginkgo Bioworks (Soaring Eagle Acquisition): the biotech bacteria startup is preparing for their SPAC IPO on a $17.5B valuation later this year.
  • Infarm (seeking SPAC): the vertical farming startup is working with Goldman Sachs to explore a SPAC IPO on a valuation over $1B.
  • Grofers (seeking SPAC): the Indian eGrocery startup is seeking a SPAC partner after a previous acquisition talk fell through. Target valuation: $1B. 
  • Aerofarms (Spring Valley Acquisition): another indoor farming startup taking the SPAC route, on an estimated $1.2B valuation bringing in over $300M in cash.
  • Benson Hill (Star Peak Corp II): crop improvement agtech startup is preparing to go public on a $1.35B valuation in Q3 2021.

💰 Who: Sample SPACs

While there are several SPACs that make a lot of noise from inception with celebrity messaging and extensive branding, many SPACs are relatively quiet prior to announcing their target company. Here are a few examples to illustrate different profiles of SPACs.

Other SPACs seeking to go public or now looking for a target company in the foodtech space include HumanCo Acquisition, Aspirational Consumer Lifestyle Corp, Novus Capital Corporation, GreenVision Acquisition Corp, Sustainable Development Acquisition I Corp (SDAC), and TPB Acquisition.

Welcome aboard the IPO train Oatly. We're headed uptown 📈

🔮 Predictions: What comes next?

Yes, SPACs are overheated and overhyped, but we don’t necessarily see a bubble bursting all at once.

What will likely happen is that the SEC (and similar regulators in other countries) will step in and force SPAC IPOs to behave more like traditional IPOs. That means better financial reporting and less speculation of the target company’s value.

Will this regulation be enough to ruin the whole party? We’ll see. We’ve already seen the chilling effect on SPACs of the SEC simply looking into the matter, and expect similar downturns whenever new regulation is considered.

We do hope that regulators target SPAC Sponsors, who are virtually guaranteed a major return (average 400%) even if the company flops on the open market. It’s a major incentive for bad-faith celebrities and investors to make a fortune while misleading the public.

In foodtech, SPACs will remain a popular avenue for industries like indoor farming or alt-dairy that can be profitable, but only with a huge initial investment.

Take Infarm, for example. Their indoor greenhouses are placed and harvested in grocery stores, and grow high-margin herbs and salad greens with minimal intervention. Once they’re there, the growers practically print cash –– but such equipment (with temp, humidity, and light control) is very expensive and hard to assemble. Infarm therefore needs huge checks to grow faster than their (ample) competition, and to offer the equipment to grocery stores at a lower price than building in-house.

So for a proven, viable business with high up-front costs, SPACs are a good fit –- and will remain a great option to get IPO capital, faster and easier than the conventional IPO avenue.

This SPAC-ability may apply to cutting-edge tech like cultured meat or precision fermentation, which are facing massive challenges in building or acquiring facilities. We are less optimistic about SPACs in eGrocery, a space that requires tons of capital but (like restaurant delivery before) is largely struggling to reach profitability. All eyes on the upcoming SPAC IPOs for Grab and Boxed, here.

A lot of companies we admire are going to make it big this year via IPO, whether SPAC or traditional.

Some will flop, some will soar. But in any case, we will see startups founded with a more sustainable food system in mind enter the ranks of big, publicly-traded business. As a planet-loving pragmatist, I can’t wait 🔔

Boring disclaimer: This is not financial advice and should not be taken as such. This is not intended to serve as the basis for any investment decision, and doing further due diligence on a potential investment is highly recommended. Invest (or don't) into stocks at your own risk.

2021: The year of the SPACs 👀

That just might be the title of a future book chapter, explaining what the heck was going on in the economy this decade.

It has indeed been a wild ride for companies going public this year. In addition to the “traditional” IPO route (like Oatly or Deliveroo), we’ve now seen hundreds of companies go public via a Special Purpose Acquisition Company (SPAC). 

SPACs are a ‘backdoor’ way to take a company public. Instead of filing to go public, companies can instead be acquired by a publicly-traded company (the SPAC) that exists exclusively to acquire a company. The SPAC process cuts a lot of corners and helps smaller companies go public, fast.

SPACs aren’t new, just trendy. They now make up nearly two thirds of all IPOs, and are particularly popular in agtech and in foodtech companies with high R&D or expansion costs.

Things got chilly for SPACs in April and May after the United States SEC raised some red flags, but SPAC IPOs appear to be picking back up. The rest of 2021 will see a few blockbuster IPOs via SPAC (especially in the 🔥 space that is indoor farming), so read on to see what’s coming and learn how these things work.

Let's ring that bell 🔔

📈 By the Numbers: IPOs & SPACs

  • At $171B, IPOs in the USA already hit an annual record this year, up from $168B in 2020. That’s an all-time high in only 6 months
  • Of those IPOs, SPACs powered 339, accounting for 61% ($105B) of IPOs to-date.
  • However, SPAC volume has plummeted in the last few weeks, with the 4-week rolling volume of SPAC IPOs decreasing by over 80% in April (down to < 20 from 120+). June appears to be picking back up.
  • In one of the marquee FoodTech SPACs, grocery delivery platform Boxed plans to go public via SPAC on a valuation around $900M.
An overview of FoodTech's  current, future and rumoured IPOs & SPACs

🤷 What: How does an IPOs work?

Let’s take a look at the “traditional” IPO process, which can be broken down into five phases:

1. Exploration 🔎 A company decides to IPO and starts looking for underwriters, sometimes privately, sometimes publicly. The underwriter is usually a big investment bank (Citigroup, Goldman Sachs, Credit Suisse) that determines the initial price, then manages the actual buying and selling of the stock. 

2. File with the feds 📁 The company files their interest to the relevant marketplace (i.e. NYSE). The specific filing depends on the country of the exchange. In the US, it’s an “S-1” filed with the Series & Exchange Committee (SEC). 

3. Opening day! 🔔 Stocks open for trading to the public. The capital from the IPO is received as cash (“stockholder’s equity”), and anybody can buy and sell the issued shares of the stock.

4. Spend. That. Cash 💸 All the share value of an IPO come to the company as cash. But a few billion on the balance sheet can be a major tax liability (and money at rest is money lost). Companies usually pay back their debts and buy new assets quickly after their IPO.

5. Uncage the Early Birds 🔓The underwriter often requires stock transferred from early shareholders be “locked up” for a period, usually 90-180 days. That means early investors and founders often can’t ‘cash out’ for a few months post-IPO. Once they’re freed, the share price usually dips.

This all takes 12-18 months and runs up a cool $750K tab, and brings a ton of financial scrutiny from the underwriter, government, and media. The company also typically has to reconfigure management, creating or expanding a board of directors.

🤔 What about SPACs?

SPACs are like an IPO in reverse: a “shell” company with no assets or revenue goes public via an IPO, then acquires an actual company (with staff, product, revenue, etc). Here’s the spiel, slowed down:

First, investors establish a new company (the SPAC) with no products or assets, and fill ‘er up with cash. SPACs are sometimes founded by high-profile investors or celebrities, like Shaquille O’Neal (yep, Shaq’s got a SPAC). 

Why the star power? Because the SPAC needs people to invest before acquiring anything. The SPAC raises its money based on the promise of the founding team, often specifying their target industry that’s aligned with whoever is leading the SPAC.

Second, the newly-minted SPAC goes public. Being basically a giant swimming pool of money, the IPO process is pretty quick. 

Third, the now-public company searches for its target company. Once they find it, they announce it and do a big media blitz to hype the deal. The deal must be approved by the SPAC’s shareholders. 

Fourth, if approved, the company is acquired by the SPAC and immediately becomes a publicly-traded company as part of the parent SPAC. This kicks off the de-SPAC phase where the original SPAC dissolves, and only the target company is left.  

If the deal is rejected, the SPAC either finds a new one or liquidates and returns its founding money to shareholders (with interest)

SPACs simplified

👍 SPACs: The Good 

⚡️ Speed SPACs are, above all else, a much faster way to go public (usually 2-4 months faster than an IPO). That means SPAC-listed companies get cash on hand, fast.

🐣 Smaller companies get to IPO. There are great companies that can’t go public due to cost, timeline, company value, or other resources. SPACs tend to help innovative, smaller companies that need the R&D or equipment cash (that’s why they’re especially popular with market-validated but early-stage.

🤝 Small-time investors are let in on the action. SPACs let small-time investors invest in the SPAC before or after its acquisition is announced (and made official), effectively letting them participate in an IPO.

👍 SPACs: The Bad 

👀 Speculative valuation. There’s no uniformity in how SPAC acquisitions report their financials. It’s typical for SPACs to include financial projections, whereas IPOs are more focused on cash flows and assets on hand. That means SPAC IPOs are valued and priced at unimaginable rates for conventional IPOs –– often over 100x the company’s revenue even while they operate at loss.

🗑️ Junk stocks
. There’s little doubt that some IPOs via SPAC listed companies with weak (or even fraudulent) financials. While the early investors and founders get to cash in big, other later-stage investors are left in the cold without a real chance to understand the stock’s risk.

⭐️ Reliance on star power
. Being a movie star or pro athlete does not make you a disciplined finance whizz. In fact, the SEC issued a warning about relying on celebrity-backed SPACs. It’s also worth noting that the “Sponsor” of a SPAC gets a 20% stake in the SPAC for very little work (and sometimes no investment). 

👮 Regulation inbound
. Speaking of the feds… It’s widely believed that the SEC and other government bodies will soon crack down on SPACs, restricting their ability to assess valuations based on future revenue and changing how the “equity” in a SPAC is handled. The SPAC slowdown in April was a response to the SEC firing a warning shot via a few letters. More to come.

A big day for plant-based. Beyond Meat's (BYND) public debut in May 2020.

Sponsored by ProVeg Incubator

Accelerator today, IPO tomorrow 🚀

We get it, you're probably reading this newsletter and picturing the day your company IPO's and you're the one up there ringing that bell. But ​hold on a minute, it's a long road there, and you're probably going to need some help to get your business ready for the big day.

That's where Proveg Incubator can help. Founders developing innovative alternatives to animal-based products, ingredients, and services can apply now to join the incubators next cohort of startups.

Attending startups get up to €200,000 in funding, benefit from a global network of industry insiders and expert mentors, access to a co-working space & test kitchen, plus join an active alumni community of plant-based innovators (and future public companies?).

Apply today, accelerate tomorrow, IPO later. Deadline to apply: July 18th.


🔔 Who: Recent IPOs in FoodTech

  • Oatly (Conventional IPO): since going public in May at $20.20 per share, Oatly stock has continued to grow, now around $26 per share. However, it’s hard to argue why a company in a crowded space like oat milk should be valued at over 33x its revenue.
  • Deliveroo (Conventional IPO): the March IPO proved to be “the worst IPO in London’s history,” with stock prices falling for a month after the opening bell. Why the fall? Deliveroo’s IPO had been majorly hyped in the press, but once investors realized their slim chance of profitability and poor scalability, the stock took a tumble.
  • AppHarvest (IPO via SPAC): after their February SPAC listing, the indoor farming startup reported a mere $2.3M revenue in their first public quarter, crashing the stock price to a low of 67% under opening price. Still trading at 800x revenue, we’ll see if AppHarvest can climb back up. 

👀  Who: Upcoming FoodTech IPOs

  • NotCo: Chilean plant-based meat and dairy company NotCo is eyeing a valuation north of $1B, which would make it Chile’s first unicorn.
  • DingDong: the Shanghai-based delivery app is going public in the US with a valuation over $6B.
  • Missfresh: the Chinese eGrocery is planning a Nasdaq listing later this year. With net losses of $93M (and sales of $236M), Missfresh’s IPO will be a great test if grocery delivery can perform on the markets without a profitable model.
  • Impossible: the alt-meat giant is exploring both a traditional IPO and a SPAC, sure to draw plenty of comparisons with Beyond, whose 2019 IPO was among the most successful of all time.
  • Instacart: while their last fundraising round this spring valued Instacart at $39B, their IPO could include valuation over $50B. Instacart is considering a “direct listing,” where they simply sell existing shares on the open market without involving underwriters or bankers.
  • AllMarket Inc (Owner of VitaCoco): after seeing the blockbuster Oatly IPO, VitaCoco’s owner is seeking an IPO with valuation over $2B.

👀  Who: Upcoming FoodTech SPAC IPOs

  • Local Bounti (Leo Holdings III Corp): indoor farming Local Bounti is pursuing a SPAC IPO later this year at a $1.1B equity valuation. They’ll use the cash to expand rapidly through the Western US.
  • Boxed (Seven Oaks Acquisition Corp): a $900M valuation will bring over $300M in cash to the eGrocery platform, expected in Q4 2021.
  • Grab (Altimeter Growth Corp): pending shareholder approval, the Southeast Asian food delivery platform is eyeing a $39.6B valuation after their SPAC IPO. They aim to raise $500M via the IPO.
  • Ginkgo Bioworks (Soaring Eagle Acquisition): the biotech bacteria startup is preparing for their SPAC IPO on a $17.5B valuation later this year.
  • Infarm (seeking SPAC): the vertical farming startup is working with Goldman Sachs to explore a SPAC IPO on a valuation over $1B.
  • Grofers (seeking SPAC): the Indian eGrocery startup is seeking a SPAC partner after a previous acquisition talk fell through. Target valuation: $1B. 
  • Aerofarms (Spring Valley Acquisition): another indoor farming startup taking the SPAC route, on an estimated $1.2B valuation bringing in over $300M in cash.
  • Benson Hill (Star Peak Corp II): crop improvement agtech startup is preparing to go public on a $1.35B valuation in Q3 2021.

💰 Who: Sample SPACs

While there are several SPACs that make a lot of noise from inception with celebrity messaging and extensive branding, many SPACs are relatively quiet prior to announcing their target company. Here are a few examples to illustrate different profiles of SPACs.

Other SPACs seeking to go public or now looking for a target company in the foodtech space include HumanCo Acquisition, Aspirational Consumer Lifestyle Corp, Novus Capital Corporation, GreenVision Acquisition Corp, Sustainable Development Acquisition I Corp (SDAC), and TPB Acquisition.

Welcome aboard the IPO train Oatly. We're headed uptown 📈

🔮 Predictions: What comes next?

Yes, SPACs are overheated and overhyped, but we don’t necessarily see a bubble bursting all at once.

What will likely happen is that the SEC (and similar regulators in other countries) will step in and force SPAC IPOs to behave more like traditional IPOs. That means better financial reporting and less speculation of the target company’s value.

Will this regulation be enough to ruin the whole party? We’ll see. We’ve already seen the chilling effect on SPACs of the SEC simply looking into the matter, and expect similar downturns whenever new regulation is considered.

We do hope that regulators target SPAC Sponsors, who are virtually guaranteed a major return (average 400%) even if the company flops on the open market. It’s a major incentive for bad-faith celebrities and investors to make a fortune while misleading the public.

In foodtech, SPACs will remain a popular avenue for industries like indoor farming or alt-dairy that can be profitable, but only with a huge initial investment.

Take Infarm, for example. Their indoor greenhouses are placed and harvested in grocery stores, and grow high-margin herbs and salad greens with minimal intervention. Once they’re there, the growers practically print cash –– but such equipment (with temp, humidity, and light control) is very expensive and hard to assemble. Infarm therefore needs huge checks to grow faster than their (ample) competition, and to offer the equipment to grocery stores at a lower price than building in-house.

So for a proven, viable business with high up-front costs, SPACs are a good fit –- and will remain a great option to get IPO capital, faster and easier than the conventional IPO avenue.

This SPAC-ability may apply to cutting-edge tech like cultured meat or precision fermentation, which are facing massive challenges in building or acquiring facilities. We are less optimistic about SPACs in eGrocery, a space that requires tons of capital but (like restaurant delivery before) is largely struggling to reach profitability. All eyes on the upcoming SPAC IPOs for Grab and Boxed, here.

A lot of companies we admire are going to make it big this year via IPO, whether SPAC or traditional.

Some will flop, some will soar. But in any case, we will see startups founded with a more sustainable food system in mind enter the ranks of big, publicly-traded business. As a planet-loving pragmatist, I can’t wait 🔔

Boring disclaimer: This is not financial advice and should not be taken as such. This is not intended to serve as the basis for any investment decision, and doing further due diligence on a potential investment is highly recommended. Invest (or don't) into stocks at your own risk.

FoodTech News Digested ✉️
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