When Nextdoor made the choice to go public via a special purpose acquisition company (SPAC), it was looking for the best pricing available, CNBC reported, quoting Benchmark partner Bill Gurley.
Gurley was also an early investor in the neighborhood-based social media network, and he’s been vocal about his support for the direct listings, which are another alternative to traditional initial public offerings (IPOs).
The average IPO in 2020 came with a 57 percent cost of capital, Gurley said, per CNBC. He added that SPACs are “remarkably cheap compared to mispriced IPOs.”
Nextdoor’s transaction will bring in $686 million, and the company will be valued at $4.3 billion, CNBC reported. The company announced its plans last week to go for the SPAC sponsored by Khosla Ventures.
The speed of new SPACs has slowed compared to earlier this year and in 2020, according to CNBC. There was something of a pullback after the Securities and Exchange Commission (SEC) issued new accounting guidance classifying SPAC warrants as liabilities rather than equity instruments.
The CNBC SPAC Post Deal Index has the number of SPACs that announced a deal within the past two years down 3.8 percent.
But activity is picking up again, CNBC reported. There have been more deals announced recently, including by FinTech company Circle, space companies Planet Labs and Satellogic and solar power firm Heliogen.
PYMNTS reported in late May that despite the lower numbers of public listings, there have been several new listings, such as those for Macondray Capital Acquisition I, Paymentus and the China-based E-Home Household Services Holdings, which show that there’s still life left for SPACs.
SPAC Research estimated that there are 325 IPOs this year thus far, which is an improvement on the overall 248 listings in all of 2020.