Two financial industry heavy weights with an affinity for fintechs have teamed up to form a blank-check company. Former The Bancorp CEO, Betsy Cohen, and Ryan Gilbert, General Partner at Propel Venture Partners (the San Francisco-based data analysis platform) have announced that their new shell company is set to go public this week with the intention of acquiring a fintech company. The special purpose acquisition company (SPAC) listed on Nasdaq on Wednesday morning.
Named FTAC Olympus Corp, the initial public offering on Wednesday seeks to raise $750 million with Cohen as Chairman and Gilbert as CEO. After the announcement of a blank-check company, the managers will have 24 months to find the acquisition. Upon shareholder approval, assets of the target company will be merged with the SPAC where an exchange of stock will take place before the chosen startup becomes a public company. As of August 5, 2020, SPACs in the U.S. have raised a total of $23.6 billion up 145% compared to the same period a year ago, according to Goldman Sachs. Stessa Cohen, consultant at Pivot Assets, revealed that the emergence of SPACs in the fintech sector is a sign of its maturity.
This will be the fourth SPAC for Cohen since her departure from The Bancorp in 2014 after 14 years there and 45 years in business. For her, SPACs are an avenue to support the fintech industry. “I thought another approach to the industry might be to try to identify those companies that had come to a level of maturity where they could make a transition from being a private company to being a public company and have greater access to capital. I looked for a structure that was not as market-timing-sensitive as an IPO so that I could be helpful to these companies,'' she shared.
Gilbert shares that using a SPAC enables certainty of execution. Cohen and Gilbert further offered that they are looking for qualities in a startup similar to that which venture capitalists prioritize. Gilbert is looking for three Ts: “team, technology and total addressable market.” Cohen, on the other hand, said she is searching for a company “with good management, a pathway to profitability and a distinctive product.”