‘The Market Seems Crazy’: Start-Ups Wrestle With Flood of Offers

Frenzy is already Causing trouble. The stock of Nikola, an electric car start-up that went public through an SPAC in June, has fallen more than 80 percent since Hindenburg Research, an investment fund, accused the company of lying about its technology in September. Accused, which is business deals and misleading. Rolling a truck down a hill in a product video. Trevor Milton, founder and president of Nicola, resigned, And the Securities and Exchange Commission and the Department of Justice have begun an investigation into the company.

The SEC has also quizzed Clover Health, a health insurance start-up and Lordstown Motors, an electric truck start-up, both of which went public in recent months through blank-check companies.

On March 10, the SEC Warn SPACs face varying risks and potential interests. The agency was particularly critical of those endorsed by celebrities, concluding that “celebrities like no other can be lured into participating in risky investments.”

For now, special purpose vehicles remain on the prowl for the target.

Jedediah UHThe chief executive of Delphix, a data infrastructure company in Redwood City, California, has experienced interest for the first time. Mr. Yuh, who founded Delphix 13 years ago, said SPAC started its business last summer. The company, which helps customers process and automate data, has recently become profitable and is a candidate to go public.

But Mr Yuh said he had not decided whether Delphix would go public via a traditional offering or any other route, such as “Direct listing“Or S.P.A.C. As they sorted through the options, SPACs flooded their inbox with messages almost every day. One even sent a mailer to Delphix’s exiled office last year while everyone worked from home in the epidemic.

Mr. Yah said that he had met with some of the SPACs eagerly. But he quickly understood that whatever the sponsors were saying to him, he wanted to hear them. Once they found out that Delphix was profitable, “they just switch gears and talk about how easy it is to work with them,” he said.

He said that he has stopped reacting to cold pitches and created a canned response to overcome others. He said the investors he met were not the kind of long-term backers that Delphix wanted. But in a gesture to the trend of celebrity-backed SPACs, he said, “I must have had a meeting with Sheik.”

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