Another blank-check company backed by a venerable Silicon Valley venture firm is shutting down.
TCV is shuttering its TCV Acquisition Corp. after failing to find a merger partner for the entity. The Menlo Park firm — legally, TCMI Inc. — plans to refund to investors the $400 million its special purpose acquisition company raised in its initial public offering two years ago, it said in a press release.
"In light of current market conditions and available target opportunities, we have determined that it was in the best interest of TCVA shareholders to return the capital held in trust," Jake Reynolds, a TCV general partner who is co-CEO of the SPAC, said in the news release. "We appreciate the TCVA shareholders who have supported us over the past two years."
TCV Acquisition (Nasdaq: TCVA) will refund investors about $10.24 for each share they own. In the SPAC's IPO, investors paid $10 a share. The company didn't explain the discrepancy, but its trust fund was invested in marketable securities that had already appreciated a bit by last September.
SPACs are created with the idea of combining with and taking public a private operating company. As part of their IPO process, the blank-check entities usually give themselves between 18 months and two years to find a merger target. If they don't meet that deadline, they are obligated to return the money they raised in their IPOs to shareholders or get investors' permission to have additional time.
TCV Acquisition, the only SPAC created by TCV, would have hit its own two-year deadline next month.
Its shutdown comes on the heels of a similar move by Khosla Ventures, which this week also said it would wind down a 2021-vintage SPAC. Khosla had already allowed another SPAC to die before the blank-check entity even completed its IPO.
There was a huge boom in the number of blank-check companies in late 2020 and early 2021. The entities were seen as an easier way for startups to hit Wall Street than holding a traditional IPO.
But their popularity has faded amid increased regulatory scrutiny, the poor stock performance of companies that went public through SPAC mergers and the greatly reduced amount of money blank-check entities were providing their merger partners.
With many SPACs now nearing their deadlines to compete mergers, their sponsors are frequently choosing to shut them down rather than seek more time to find combinations. From the start of this year through March 24, 63 SPACs have been liquidated, according to SPAC Research, which keeps tabs on the industry. Those entities had raised a combined $18.6 billion.
Here is other Bay Area venture and startup news at the end of the week which is also the end of the first quarter:
Fundings
- Orb Inc., San Francisco, $14 million, Series A: Menlo Ventures led the round for this provider of a billing service for cloud-based software providers. The Cannon Project, Data Community Fund, Essence VC, Fog Ventures, Scribble Ventures, South Park Commons and SV Angel also invested.
- Spera Cybersecurity Inc., Palo Alto and Israel, $10 million, Seed: YL Ventures led the round for this provider of a cybersecurity service that focuses on identity related threats.
- Rob's Backstage Popcorn LLC, San Francisco, $7 million, Series A: Palm Tree Crew led the round for this maker of packaged, flavored popcorn. Hershey's and UTA Ventures also invested.
- Dashbot Inc., San Francisco, $6 million, Series A: Florida Funders and Bessemer Venture Partners led the round for this provider of software that analyzes conversations with customers.
- Anvil LLC, San Francisco, $5 million, Series A extension: Craft Ventures and Gradient Ventures invested in the round for this provider of e-signature and digital document management software.
Funders in the news
- Accel-KKR raised $5.3 billion for two new funds. The Menlo Park private equity firm raised $4.4 billion for its seventh flagship fund that targets majority buyout investments in lower-middle market and middle-market companies in software and IT-enabled services. The other $920 million fund will focus on smaller public software and tech-enabled services companies.
- Prysm Capital raised $350 million for its debut fund. The San Francisco private equity firm was founded by three former members of BlackRock Private Equity Partners — Matt Roberts, Muhammad Mian and Jay Park.
