SPACs and Cryptocurrency: New Trends in Funding

Special Purpose Acquisition Company (SPAC) is a company that is established by investors for the purpose of publicly offering shares of an organization without going through the problems associated with the traditional IPO process.

What is a special purpose acquisition company?

An SPAC, or special purpose acquisition company, is a company created by investors to raise money through an IPO (initial public offering). SPACs are not in business and are created for the purpose of acquiring an existing company. They are typically created by a group of investors, known as “sponsors,” with the intention of closing deals in a particular industry.

The funds raised by SPACs in an IPO are placed in an interest-bearing trust account from which they cannot be expended except to complete the acquisition or return the money to investors in the event of liquidation of the SPAC. Such companies act as a liaison between the public and businesses, which often find it difficult to access funds.

SPACs are a common way for companies to go public, avoiding the difficulties associated with traditional IPOs and ICOs and not requiring the strong market presence required for a direct listing. Compared to IPOs and ICOs, they are faster and more convenient because they allow projects and companies to get guarantees from investors early on at an agreed-upon price, rather than the night before like a traditional IPO.

Essentially, becoming a SPAC will allow business owners to go through the IPO process faster under the guidance of an experienced partner.

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