These “blank-check” companies could expand the industry’s footing on Wall Street.
The education technology sector could soon have a few more public companies, as an increasingly popular investment trend overlaps with heightened attention to remote learning.
Special purpose acquisition companies, more commonly known as SPACs, are publicly traded firms whose purpose is to raise money to bring an existing private company into the public markets.
They’re generally led by people with expertise in a sector who are looking to invest in a company in that realm. They sell shares in their organization, promising investors they’ll use the money to select a company and take it public. SPACs were formed to provide an easier path than the traditional initial public offering process, but there are a few caveats, including that they typically have around two years to make a deal before they must return investors’ funds.
Ed tech has long attracted private investors, said Jeff Silber, a stock analyst with BMO Capital Markets. And it continues to. Venture capital and private equity funding in the sector reached a record $2.2 billion in 2020, eclipsing the prior year by about 30%, according to EdSurge.