Reid Hoffman and Mark Pincus, two of Silicon Valley's best-known founders turned investors, have joined forces to raise $600 million from the public for a new "blank-check" special purpose acquisition company.
The new SPAC is called Reinvent Technology Partners, and it has a wide scope. The company is looking for a unicorn startup to invest in, it said, adding that the US has a large number of them and few have gone public.
"We see an opportunity to partner with founders and a chief executive officer who have already achieved scale and help them continuously invent and reinvent as a public company," the company's prospectus said.
Reinvent's prospectus specifically mentions the glut of startups valued at $1 billion or more by private investors, many of which do not opt to go public through an initial public offering.
"We believe this disconnect between the quantity of scaled technology companies and the number of those companies that actually go public each year has created an attractive backlog of potential targets for our blank-check company," the prospectus said.
If the new SPAC hopes to acquire a unicorn however, it will need more capital than the $600 million it plans to raise from public investors, or it will need to partner with other investors.
Hoffman is known as the billionaire founder of LinkedIn who sold that company to Microsoft for over $26 billion in 2016. Before that, he was a member of the "PayPal mafia," the founding team that sold PayPal to eBay for $1.5 billion in 2002 and went on to found a laundry list of tech's biggest, most successful companies. Both of them are active angel investors and backers of Facebook, Twitter, Airbnb, and Epic Games. Hoffman is also a longtime partner at the A-list venture-capital firm Greylock Partners, where he's backed such startups as Coupons.com and Edmodo.
Pincus, an active angel investor, is best-known as the founder of the social-gaming company Zynga. He's backed about 80 startups, according to PitchBook, including Coda and Wealthfront.
Reinvent has a third founder, Michael Thompson, who will act as CEO and chief financial officer. Thompson is perhaps best-known for his role as the fund manager of BHR Capital, a hedge fund that at one point had $1.9 billion under management but closed shop in 2016.
At BHR, Thompson helped with the turnarounds of Six Flags and Gramercy Property Trust. He's also an active angel in health tech, backing such startups as Forward Health, Vault Health, and Whisper, according to the prospectus.
As for why these three would team up for a SPAC, the answer is that SPACs are the new black in Silicon Valley and across the finance industry. More than half a dozen SPACs have launched their paperwork with the Securities and Exchange Commission in just the past few days, according to a quick scan of the latest S-1 filings.
The object of a SPAC is to acquire a privately held company using the funds raised from public investors. The acquired company is folded into the SPAC, effectively turning it into a publicly traded company without the need to do the dog-and-pony show (and undergo the in-depth scrutiny) of a traditional IPO.
- Now read:
- Startup founders are quietly suffering with increased mental health issues since the startup of the pandemic and fear being stigmatized
- For the first time, the SEC will allow people who are not already rich to invest in startups and venture funds
- 12 Palantir insiders who can cash out huge paydays after the company goes public
