Kevin Hartz, the start-up founder and technology investor who has backed Airbnb and Uber, has joined the boom in blank-cheque companies with his own vehicle, comparing their rise with the early days of venture capital.
Mr Hartz’s special-purpose acquisition company, “one”, listed on the New York Stock Exchange on Tuesday after raising $200m to acquire and take public a tech start-up. Mr Hartz said the Spac would be the first in a franchise, as he attempts to improve the reputation of the cash shells, which have suffered from poor performance historically.
“Just as we saw in the ’70s and ’80s, venture capital start to grow and in the ’90s really take off, we see the same with Spacs,” Mr Hartz told the Financial Times. “It’s the time and the place for Spacs.”
Mr Hartz said he eventually wants his Spacs to come without equity warrants, which can be lucrative for investors but costly for companies, and to reduce the cut received by his sponsoring firm, A-star.
“The promote is just egregious right now,” Mr Hartz said, referring to the portion of Spacs owned by their founders, typically 20 per cent. “It tracks in the carpetbaggers and unsavoury characters.”
Despite the Spac being “many times oversubscribed”, Mr Hartz said he chose not to increase its size so that he could target companies as small as $1bn.
The listing comes as other Silicon Valley investors look to start Spacs or have their companies merge with the vehicles, as venture capitalists stare down a growing list of investments waiting years to go public or be acquired.
Spacs have raised a total of $27.5bn in US public offerings this year, according to Refinitiv data, more than doubling their total all of last year.
That sum includes more than $1bn raised by former Facebook executive Chamath Palihapitiya for two Spacs after his first version took the space tourism company Virgin Galactic public in 2019.
Ribbit Capital, a fintech investor that has backed the cryptocurrency exchange Coinbase and trading app Robinhood, is also planning to raise upwards of $600m for a Spac, people briefed on its plans have said.
“We’ve seen [staying private] go horribly wrong with overcapitalising, with poor governance practice, so we see this as a critical movement,” Mr Hartz said.
But Spacs still hold a reputation for targeting underperforming businesses, providing a backdoor to the public markets for companies that would have trouble completing a traditional public offering.
Mr Hartz, who co-founded the ticketing business Eventbrite with his wife Julia, said he would use his connections in Silicon Valley to promote the new vehicle. Mr Hartz is also known as a prolific early investor in start-ups personally and through his firm, Y Ventures.
Mr Hartz’s Spac is chaired by the venture capitalist Pierre Lamond, a former partner at Sequoia Capital who was known for backing several large semiconductor businesses. Goldman Sachs advised on the offering.
“Our reception and the inbound that we’ve gotten indicates that [venture capitalists] all have a lot of portfolio companies that are asking questions about this,” Mr Hartz said.