Thread by @DJohnson_CPA

As a reminder, I have aggregated the investor presentation data for SPACs w/ DAs and it's available at spactrack.net/daniel. Below are screens that are available.

It's important to keep in mind that projections are based on many assumptions that must be evaluated.

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SPACs offer a competitive advantage over IPOs for certain companies given the ability to make forward projections. This makes SPAC mergers ideal for early-stage growth or capital intensive companies in developing sectors.

As a SPAC investor in the secondary market, it is important to think critically about these projections and ask basic questions to evaluate the reasonableness of these projections. Some basic questions to think about when reviewing the investor presentation…

Is the company in a sector that is projected to significantly grow over the coming years/decade? This would mean the company has a sector tailwind and the company will experience growth due to the market (think EV’s, gambling, etc.).

Does the company have a product/service that will take market share from existing market participants? These type companies have a differentiated product in such a way that they have a competitive sales advantage given the product improves a legacy alternative.

Does the company note in the presentation that it has signed contracts or letters of intent? While many contracts may be cancellable, this gives a stronger indication of the ability to meet the projections.

Does the company have a product or service that creates a new category? These type companies do not have significant competition from any other company at scale. With a round of capital, they will be able to further extend their competitive moat.

Does the company have any type of other moat? This can be from marketplace, data, cost, brand, intellectual property, or regulatory.

Does the company have key partners/customers that dominate their respective sectors? An example would be a SPAC who has a key partnership with a mega cap tech company such as Amazon, Apple, Google, etc.

It’s important to remember that the further out a projection gets, the more unreliable the projection becomes due to variations in assumptions (unforeseen economic disruptions, market doesn’t grow as expected, a new product/service disrupts the company)

The current SPAC environment is offering public investors access to earlier stage investing opportunities than have been available for quite some time. This is extremely exciting for public investors but should also be met with more skepticism.

The earlier stage a company is the more volatile up and down swings will be over time as the company grows into its valuation (or fails to grow into it). Developing an early-stage growth company into a mature and profitable cash generating business is a difficult task.

There will be significant winners from this new SPAC era, but with early-stage companies it is even more important than ever to keep up with the company on a regular basis. I'll pin this thread to my profile for a short time period for quick reference!