IPO or SPAC: a quantitative analysis of venture capital preferences in public exits

Abstract

2020 marked the beginning of a boom of special purpose acquisition companies (SPACs). As all these SPACs look for acquisition targets, this study raises the question if exiting using SPAC acquisitions is a viable exit strategy for venture capital backed firms or if the VC industry still prefers traditional IPOs. The results from the analysis of 1303 public exits between 2010 and 2020 indicate that venture capital backed firms tend top refer traditional IPOs and a void merging with a SPAC as a public exit strategy. Moreover, for firms controlled by venture capital, the preference for an IPO is even stronger.