Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

23andMe to merge with VG Acquisition Corp. to become publicly-traded company

mediacenter.23andme.com

Post reply on HN
Print view View original

21–30 of 181 posts

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#21

Post by detaro »

engineer_22 wrote: post #10

Why would a company go through a SPAC instead of an IPO? Does the SPAC merger constitute a hedge against uncertainty in an IPO? What I mean is, 23andMe gets cash NOW and the SPAC gets the company at a discount but accepts the risk the IPO might not meet its goals? Could someone please explain the strategy?

In addition to speed and guaranteed price a SPAC merger also has less reporting requirements, because the SPAC already did go trough the IPO paperwork when it was created. And didn't have to explain weird things about the business to investors because it had no history or things to be going on. It then can relatively easily buy 23andMe, and 23andMe doesn't have to explain its business risks etc to the public as much - which could have been an issue and risk to the stock price given the history of probes about medical claims etc.

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#22

Post by l-lousy »

engineer_22 wrote: post #10

Why would a company go through a SPAC instead of an IPO? Does the SPAC merger constitute a hedge against uncertainty in an IPO? What I mean is, 23andMe gets cash NOW and the SPAC gets the company at a discount but accepts the risk the IPO might not meet its goals? Could someone please explain the strategy?

23andMe gets to IPO immediately without having to go through a lot of the regulatory work that would normally happen in a direct listing because the SPAC acquiring them is already public. This means they can get a good percentage of the normal cash infusion with half the hassle.

Those creating the SPAC get a discounted price on the stock they eventually take public, but for the bill via increased risk they might not get a good company.

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#23

Post by mejutoco »

engineer_22 wrote: post #10

Why would a company go through a SPAC instead of an IPO? Does the SPAC merger constitute a hedge against uncertainty in an IPO? What I mean is, 23andMe gets cash NOW and the SPAC gets the company at a discount but accepts the risk the IPO might not meet its goals? Could someone please explain the strategy?

I believe a SPAC might be cheaper and has less obligations before "going public" that an IPO.

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#24

Post by fatherof2 »

engineer_22 wrote: post #10

Why would a company go through a SPAC instead of an IPO? Does the SPAC merger constitute a hedge against uncertainty in an IPO? What I mean is, 23andMe gets cash NOW and the SPAC gets the company at a discount but accepts the risk the IPO might not meet its goals? Could someone please explain the strategy?

The company gets to go public without having to immediately provide all the materials for due diligence for public investors. The companies shares get peddled to the general public and the SPAC investors and the company both win. The public is left holding the bag.

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#25

Post by TheRealDunkirk »

In a letter to customers, CEO and co-founder Anne Wojcicki said, "We're about to cash out of this bitch, and go kick it on a South Pacific island. Just fair warning that the database is going to have new owners soon, who will be keen to sell access to your most-intimate biological details to anyone with an idea on how to make money on it, and a checkbook."

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#26

Post by lordnacho »

detaro wrote: post #21
engineer_22 wrote: post #10

Why would a company go through a SPAC instead of an IPO? Does the SPAC merger constitute a hedge against uncertainty in an IPO? What I mean is, 23andMe gets cash NOW and the SPAC gets the company at a discount but accepts the risk the IPO might not meet its goals? Could someone please explain the strategy?

In addition to speed and guaranteed price a SPAC merger also has less reporting requirements, because the SPAC already did go trough the IPO paperwork when it was created. And didn't have to explain weird things about the business to investors because it had no history or things to be going on. It then can relatively easily buy 23andMe, and 23andMe doesn't have to explain its business risks etc to the public as much…

Am I the only one who thinks that's a massive hole in the rules? You IPO an empty shell, which passes easily because it does nothing, and then any old shop with a messy business can then be bought by it?

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#27

Post by echelon »

mdorazio wrote: post #15
echelon wrote: post #2

Is there a way to predict which SPACs will merge with which startups? It seems like if you had knowledge of this and you could predict a highly profitable business merging with a SPAC, you could get in at the ground floor for incredible and almost immediate share price growth. I wouldn't invest in 23andMe, but I would invest in Stripe. Which SPAC will it merge with?

Check the SPAC subreddit and look at blogs that actually do analysis on the SPAC teams themselves. The best indicator is usually who runs the SPAC and their connections in SV + focus industry. But ultimately, you can't reliably predict it. You can do what I do and shotgun investment in several promising SPACs and hope that one hits in a reasonable amount of time (I'm 1/4 so far this year).

That's great info! Thanks.

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#28

Post by koolba »

fatherof2 wrote: post #24
engineer_22 wrote: post #10

Why would a company go through a SPAC instead of an IPO? Does the SPAC merger constitute a hedge against uncertainty in an IPO? What I mean is, 23andMe gets cash NOW and the SPAC gets the company at a discount but accepts the risk the IPO might not meet its goals? Could someone please explain the strategy?

The company gets to go public without having to immediately provide all the materials for due diligence for public investors. The companies shares get peddled to the general public and the SPAC investors and the company both win. The public is left holding the bag.

Don't forget skimping out on the fees and money left on the table when dealing with a traditional investment bank.

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#29

Post by grey-area »

fatherof2 wrote: post #24
engineer_22 wrote: post #10

Why would a company go through a SPAC instead of an IPO? Does the SPAC merger constitute a hedge against uncertainty in an IPO? What I mean is, 23andMe gets cash NOW and the SPAC gets the company at a discount but accepts the risk the IPO might not meet its goals? Could someone please explain the strategy?

The company gets to go public without having to immediately provide all the materials for due diligence for public investors. The companies shares get peddled to the general public and the SPAC investors and the company both win. The public is left holding the bag.

Wow that seems like the kind of behaviour you'd see in a massive speculative bubble.

People buying blank cheque companies without knowing what they're going to get.

Re: 23andMe to merge with VG Acquisition Corp. to become publicly-traded company

#30

Post by monkeydust »

mdorazio wrote: post #15
echelon wrote: post #2

Is there a way to predict which SPACs will merge with which startups? It seems like if you had knowledge of this and you could predict a highly profitable business merging with a SPAC, you could get in at the ground floor for incredible and almost immediate share price growth. I wouldn't invest in 23andMe, but I would invest in Stripe. Which SPAC will it merge with?

Check the SPAC subreddit and look at blogs that actually do analysis on the SPAC teams themselves. The best indicator is usually who runs the SPAC and their connections in SV + focus industry. But ultimately, you can't reliably predict it. You can do what I do and shotgun investment in several promising SPACs and hope that one hits in a reasonable amount of time (I'm 1/4 so far this year).

Yea seen a few HF's now pitching SPAC funds which essentially is the shotgun approach. There is also an ETF (of course!) - SPCX (US19423L6728)
Post reply on HN