Buzzword Bingo Word of the Day: SPAC
Fintech Startup Sofi is going public via a SPAC by Chamath Palihapitiya (of course)
A Special Purpose Acquisition Company (SPAC) can be summarized as the exact opposite of a traditional IPO. In an IPO, you go public to raise more money. In a SPAC, you raise money first via a “blank check shell company” which then buys the company that wants to go public.
“You can think of it like: an IPO is basically a company looking for money, while a SPAC is money looking for a company,” said Don Butler, managing director at Thomvest Ventures. [source]
Sofi is going public via a SPAC by venture capital investor Chamath Palihapitiya. I used “of course” in the subheadline because Chamath has always been around but in the past 6 months, he has been on a media blitz. So it doesn’t surprise me that he’s leading the way.
I expect to see more SPAC’s in the news, and we will definitely be hearing more from Chamath. I had a funny tweet to embed about the rise of Chamath, but it’s a little NSFW (even for my standards).
As always, here are 5 fintech stories that are interesting and signs of things to come for fintech.
Didn’t they get the SPAC memo? Robinhood is preparing for its 2021 “traditional” IPO and may sell shares directly to users
One of the leading sectors in Fintech right now is wealthtech, which includes the rising star app Robinhood. The online trading tech giant plans to launch its IPO with Goldman Sachs in 2021 as the first of the wealthtech giants to do so, which could really pave the way for other players to follow their lead. As Ricky Bobby famously said, “if you ain’t first, you’re last”.
In rebuilding our futures post-COVID, creating more citizen developers through low-code technology will pay a key role
Low-code tech lowers the barriers of technology and allows more people that ability to use technology to create innovation solutions. Organizations that invest in enabling everyone to become citizen developers are often much more profitability and more agile. Citizen developers paired with software engineers are a powerful combination in any enterprise.
Why Square’s Expanding Ecosystem Threatens Banking’s Future
Square has been making a lot of noise since its conception. Square’s third quarter revenues are over 3 billion and have recently acquired the tax unit of TurboTax. Square has slowly created an ecosystem of products that deal with customer problems. With the P2P system, Cashapp, its point of sale technology, and their debit card. It’s no wonder that some people feel like they’re a bank.
How Bill.com, The Boring Bookkeeper of Fintech, Became one of 2020’s Hottest Stocks
Rene Lacerte is the face of Bill.com, the bill-paying unicorn that was just valued at $10 billion. Who could have guessed that 15 years earlier, he was asked to step down as CEO from his own company? Luckily he had the foresight to forge ahead in the cloud-based bill paying business, which has become exponentially more important during covid.
China regulator puts country’s fintech giants on notice hinting at more rules
Over the past few months, Chinese regulators have been growing increasingly concerned about the size of its technology giants and have proposed draft rules to regulate areas including data use and antitrust. Their hope is that this will encourage innovation in Fintech while enhancing risk control. New ideas and phenomenon in Fintech have led to new problems – how can these huge companies be regulated fairly?