2020 has been the year of the special purpose acquisition company (SPAC) and we expect 2021 to be even more significant.
During the last quarter, we have seen a significant increase in the number of SPACs that are going public on a big board stock exchange like the Nasdaq. From electric vehicles to space, from cannabis to data analysis, all types of businesses are going public through a SPAC.
Although SPACs have been around for years, the investment vehicle has been picking up steam in 2020 and this is a trend that we expect to continue. A SPAC raises capital in an initial public offering (IPO) with the goal of acquiring a private company. The company that is acquired by a SPAC will then go public as result of the merger and is considered to be a less expensive route to the traditional IPO process.
Earlier this week, Weedmaps jumped on the SPAC bandwagon and is working to complete a transaction to go public at a $1.5 billion valuation through a merger with Silver Spike Acquisition Corp., a blank-check acquisition firm.
In 2008, Weedmaps was founded and is considered to be a high-profile cannabis business. The company sells a cloud-based operating system for cannabis retailers and hosts a review and ratings platform for sellers. During the last decade, Weedmaps became one of the best known cannabis brands and we are favorable on how the story has evolved during this time.
Silver Spike is led by cannabis industry executive Scott Gordon. Last year, he raised $250 million as part of an IPO on the Nasdaq with a focus of acquiring a company in the cannabis sector. We believe that Scott chose a great brand to acquire through Silver Spike and will monitor how the conversation progresses over the next 48 hours.