A Tale of Two (Almost) SPACs

For two years, space startups and other high-tech, early-stage companies sought mergers with Special Purpose Acquisition Companies (SPACs) as a quick way to amass the equivalent of three to four traditional capital raises. But, in late 2022, the tides began to recede from the SPAC tsunami as investors grew distrustful of meteoric (read: unrealistic) revenue projections, leading many to withdraw pre-committed funds.

Two companies – weather startup Tomorrow.io and in-space logistics venture D-Orbit – caught in the churn, chose to cancel their SPACs and raise another private funding round. D-Orbit’s SPAC investors redeemed 59% of their shares, which would have left D-Orbit with just $49.3M in proceeds. It took another year, but D-Orbit’s patience paid off in the form of a $110M Series C round announced Jan. 11.

Tomorrow.io was similarly fortunate. The company pulled the plug on its SPAC in March 2022, before redemptions were announced, citing market conditions (peer space SPACs Virgin Orbit and Terran Orbital saw redemption rates exceeding 80%). Rather than risk the same fate, Tomorrow.io returned to private markets and successfully raised $87M last June.

Companies that hung through with their SPACs, high redemption rates and all, have found it more trying to raise additional capital due to severely eroded share prices. If 2023 was a trying year for de-SPAC’d companies, 2024 will be a year of reckoning. Companies that felt they missed out on the SPAC wave may be thankful for their choices going into 2024. 

SOURCE: https://spacenews.com/d-orbit-raises-110-million-to-expand-space-logistics-services/