IPO Alternatives: SPACs, Direct Listings & Private Market Investments

Published on
October 14th, 2020
Duration
54 minutes


IPO Alternatives: SPACs, Direct Listings & Private Market Investments

The Interview ·
Featuring Kelly Rodriques

Published on: October 14th, 2020 • Duration: 54 minutes

What are the advantages and disadvantages of a company going public? Kelly Rodriques, CEO of Forge, an online trading platform that facilitates and brokers investments in shares of large private companies (so-called "pre-IPO" companies), speaks to Real Vision senior editor, Ash Bennington, about the booming public market and why private companies are turning to SPACs and direct listings instead of traditional IPOs. He also weighs in on how retail and accredited investors can gain access to private companies before going public and monetary policy's impact on the public market. Filmed October 9, 2020.

Comments

Transcript

  • DS
    David S.
    17 October 2020 @ 00:33
    Keep the accredited investor rules in place...they're there for a reason to shield regular folks. Relaxing that would just turn the vacuum on to siphon more money from the uninformed/inexperienced to the .01%
  • GH
    Gregory H.
    14 October 2020 @ 09:19
    Ironically, SPAC's are going to take away a ton of his (Forge/Sharespost) business... And this is coming from someone who has an account with Sharespost and start-up funding sites like WeFunder (recently invested in "Boxabl" there) ... SPAC's are the most equalizing force for retail investors in a long time... Allows retail to make bets on any one of hundreds managers pre-deal announcement and also lets the little guy invest at any moment between when the target company is publicly announced and months later when reverse merger closes... I understand he's not doing the interview to pick favorites, but it is hard to talk about the SPAC boom without mentioning Chamath Palihapitiya... early Facebook executive, Social Capital VC CEO, and he has killed it with his public investing calls on Amazon in 2015 and Tesla in 2016... He is already the "SPAC King"... IPOA (1st Social Capital SPAC) merged with Virgin Galactic and started trading post-merger October 2019 (now "SPCE" ticker, 100%+ gainer)... IPOB had the Opendoor merger announcement in September 2020 (140%+ gainer)... IPOC had the Clover Health merger announcement October 2020 (last week, 6% gainer)... IPOD, IPOE, IPOF SPAC's just listed on 10/9/2020 (last Friday), are now trading, and next in line for target companies... For anyone new to SPAC's, all the Social Capital SPAC's above have $10 NAV per share in cash pre-merger, which makes it real easy to calculate pre-merger speculations in price... One important thing the interview discussion left out is that many SPAC's charge a management and or merger fee, but Social Capital SPAC's dont't, and more importantly for aligning interests, Social Capital / Chamath take 10%-15% stakes in all SPAC's so far... For people who want to go a level deeper, each of the Social Capital SPAC's pre-merger (IPOB - IPOF currently) trade with 3 tickers on NYSE... For example, with IPOB / future Opendoor, "IPOB" is just the equity, "IPOB-WT" is just the warrants, and "IPOB-UN" is equity and warrants... I'm still doing deep dives on IPOB/IPOC for research, so I'm not sure of the ratio of warrants to stock for each instrument... Chamath interviews for anyone interested are all over YouTube and you probably have seen his recent SPAC announcements on CNBC directly... check out his once monthly "All-In" podcast with his 3 pals... He has also already reserved NYSE tickers for IPOA to IPOZ, so you can see this is really about disrupting Wall Street IPO model for him... Even if you don't want to invest in these companies, this is great for giving the little guy more choice than there otherwise would be... http://www.socialcapitalhedosophiaholdings.com/index.html... Disclosure: Owned "SPCE" around $16.50 cost base and bought IPOD, IPOE, IPOF yesterday...
    • DL
      D L.
      14 October 2020 @ 22:22
      would love to hear your thoughts about this. John brings up some great points about SPCE on the exchange. https://exchange.realvision.com/post/investing-in-space-a-big-bet-for-the-final-frontier-what-could-be-better-5f7804e4f7eb5320b8390894
    • RM
      Reed M.
      15 October 2020 @ 06:57
      Gregory H.Very informative comment. I want to talk to you in more depth. I am a Blacklist member at Real Vision. My name is Reed Moskowitz. What is best way to communicate with you?
    • GH
      Gregory H.
      15 October 2020 @ 09:41
      @D L. - I disclosed a couple days ago on that "SPCE" Exchange Thread that I have a 1% position, but I will dig through John's detailed takedown of Virgin Galactic and then write-up my thoughts... @Reed M. - look forward to connecting on "The Exchange"... Just search for "Gregory Herman"... Take a look at my "Funko" (FNKO) equity thread on the exchange... it's my largest single position in my portfolio at 4.5%... I have been a RealVision member since May 2015 and enjoy talking about all macro, geopolitics, bottoms-up analysis, private market deals, startups, and more...
    • CP
      Chamil P.
      16 October 2020 @ 03:53
      Very informative comment. I have seen a few interviews of Chamath and he always adds a lot of value. I am yet to dive into his SPACs though. Would love to see him on RV.
  • SB
    Stewart B.
    15 October 2020 @ 13:31
    Excellent content. Gosh, if I were running a fraudulent company (even one with some revenue), or a 'fake it till you make it' business, I would love that platform. Low regulation makes this all the better! It could be good for insider trading too. I doubt there would be any backend checking. Create a pre-unicorn, hype it till all hell, draw in new liquidity with careful regular sound-bites and non-GAAP reports, dilute as much as you can, and laugh all the way to the bank.
  • GH
    Gregory H.
    15 October 2020 @ 09:51
    If you are smaller accredited investor, "EquityZen" has lower investment minimums per deal of $20,000...
  • AG
    Adam G.
    14 October 2020 @ 20:12
    Scary... he can’t remember a single Spac as an example...
    • GH
      Gregory H.
      15 October 2020 @ 09:47
      Incentives... you can't expect him to be objective when it takes food from his table...
  • DS
    David S.
    14 October 2020 @ 18:31
    Excellent interview. Must run half way through. I learned a lot already. This is IPO arbitrage that is really adding a lot of value and flexibility to the system. Thanks. DLS
    • DS
      David S.
      14 October 2020 @ 22:10
      Thanks again. Hopefully the "ETF" market will carefully bundle private capital companies together so more of us can allocate a small portion to our portfolio. After the stock is issued to an accredited investor can it be traded only to another accredited investor or can it be sold to Aunt Sally who is not accredited? DLS
  • NF
    Neal F.
    14 October 2020 @ 16:49
    This was an informative interview Ash. Good insight into late stage private company options. My firm participated in both the SNOW and PLTR offering/listing. Huge contrast between the two and a framework for deciding to participate between these different event types was well covered in the interview. Nice job.
    • AB
      Ash B. | Real Vision
      14 October 2020 @ 19:09
      Thanks, Neal. I found it very informative as well. Looking forward to having Kelly back.
  • MS
    Melissa S.
    14 October 2020 @ 19:08
    Very informative thank you !!
  • HR
    Humberto R.
    14 October 2020 @ 16:01
    Working on my Series 65 exam. Part of the new updated requirements for becoming "accredited".