A report suggests that metal 3D printer manufacturer VELO3D is set to go public via a SPAC.
The report from FDGT Academy said:
“Velo 3D will go public via SPAC merger with Jaws Spitfire Acquisition crop in a valued deal of $1billion and will be trading under the ticker SPFR.”
Let’s take this apart.
VELO3D is a rapidly growing metal 3D printer manufacturer that has built a system that can 3D print large structures with very accurate detail. Their process virtually eliminates the need for complex support structures that would otherwise be quite costly to remove. These provide significant advantages over many alternative metal 3D printer producers.
“Go public” is a term meaning the company intends on trading shares publicly in stock exchanges rather than holding them privately by a few investors. Typically the process required to “go public” is quite arduous, as there are massive amounts of regulatory work to be done, and approvals to be obtained. That process is known as an “IPO”, or “Initial Public Offering”, where the company’s shares are first offered to the public.
Companies want to “go public” for two reasons. First, selling otherwise idle shares to the public can very quickly raise enormous sums of money. That cash can be then used to expand operations, perform new research & development projects, open up new sales markets, hire more workers, etc.
The second reason is that when a share is sold to the public, that establishes the market value of a share. If someone buys a share for US$20, then ALL shares could be considered of similar value.
For those currently holding private shares, this suddenly could boost the paper value of their shares tremendously. Remember, the founders and early staff of startup companies usually hold many shares obtained at little or no cost.
Then there’s the matter of a “SPAC”. This is a term you’ve been hearing a lot recently and will be hearing a lot more about in coming months. It stands for “Special Purpose Acquisition Company”.
Basically it is a real company that has gone through the arduous process of an IPO and is currently trading on the stock market. The idea here is for the SPAC to acquire a private company, and thus the assets and operations of the acquired company are effectively now trading on the markets without the need for a burdensome IPO process.
In most SPACs, the takeover or merger is done in such a way to allow the private company to effectively retain its identity in the new public form. Sometimes the SPAC will change its name to the name of the acquired company, for example. From an outside observer’s point of view, it will appear that the private company just got put on the stock market.
SPACs are created for just this purpose, and those who make them are usually richly rewarded as a side-effect of the acquisition. In this case, it appears that the SPAC will be “Jaws Spitfire Acquisition Corp”.
For VELO3D, this is a massive step, putting them in the same realm as Stratasys, 3D Systems and most recently, Desktop Metal and Markforged who went the SPAC route, and Massivit 3D with its recent IPO. The VELO3D move will also net them a vast treasure from which they will be able to launch new products, expand their sales and generally grow much faster.
For many years there were only a small handful of publicly tradable 3D printing companies, but through SPACs there are a lot more, with no doubt even more to come.
It sounds like one of them will soon be VELO3D.
Via FDGT Academy