Which companies go public via SPACs? The role of venture capital

This study investigates the characteristics and stock market performance of companies going public via special-purpose acquisition companies (SPACs). Using a sample of 798 companies that went public in 2020 and 2021, we compare those companies that went public via SPAC to companies that conducted a traditional IPO. Moreover, we examine the potential impact of venture capital funding on the mode of going public and the post-listing performance of the respective companies. Our results show that companies going public via SPAC in 2020 and 2021 did not systematically differ in their firm characteristics from traditional IPO companies. However, they perform nevertheless constantly and significantly worse in terms of stock return over a period of six months after becoming publicly listed. Venture capital funding has not per se an impact on the mode of going public, but companies with more prestigious VCs invested prefer to chose a traditional IPO over a SPAC to go public.