Ex-Qualcomm executives form Prospector Capital and raise $ 325 million to sell SPAC stock

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Two ex-Qualcomm executives and key backers of the former Soccer City project in Mission Valley have raised $ 325 million in a SPAC – a mailbox company that stores cash through an initial public sale of shares to acquire companies that are then publicly traded become.

Prospector Capital Corp. of San Diego sold 32.5 million shares at $ 10 each in an IPO earlier this month. According to the prospectus, the Special Purpose Acquisition Company is looking for “companies with progressive and highly differentiated solutions for the technology sector”.

Prospector’s chief executive is Derek Aberle, co-founder and vice chairman of XCom and past president of Qualcomm from 2014 to 2018. Steve Altman, chairman of Prospector, was president of Qualcomm from 2005 to 2011.

In addition, Nick Stone is FS Investors’ Chief Financial Officer, with Mike Stone as the investor. Unrelated Nick Stone and Mike Stone spearheaded an unsuccessful attempt to bring a Major League Soccer team to San Diego through the redesign of Qualcomm stadium grounds.

Prospector Capital has not yet identified an acquisition target, Aberle said in an interview. However, he believes that the technology and business expertise of Prospector’s sponsors will make it an attractive partner if the right company joins them.

“Not all SPACs are created equal,” he said. “In the past, they were only viewed as a funding tool. I think now they are increasingly questioning the sponsor group and what value they can bring beyond pure capital. “

Prospector originally planned to sell 25 million shares and raise $ 250 million. Due to investor demand, the number of shares on offer has been increased.

SPACs work something like reverse mergers. A company with no business goes public with the sole intention of acquiring one or more companies with real business, products and revenue.

Once the merger is complete, the acquired companies will be listed without having to go through the traditional IPO.

SPACs have become an increasingly popular alternative for startups looking to gain liquidity for investors and access additional capital to scale their business, even if they are not quite ready for a traditional IPO.

Although they’ve been around for years, the SPACs rose in 2020, setting a record for the number of IPOs, according to Ernst & Young.

Last year there were 248 SPAC IPOs in the US markets that spent $ 81 billion on acquisitions.

This compares to just 60 SPAC IPOs in 2019, bringing in $ 14 billion.

SPACs tend to buy younger companies that may lack the revenue or other benchmarks normally required to go public in a traditional IPO. Certain emerging sectors, such as electric vehicles, have been particularly active for SPAC acquisitions.

“It gives early stage companies the opportunity to get cash earlier and become public companies,” said Tim Holl, partner in the Ernst & Young San Diego office. “But there is also a risk in being a small public company. In the past, if you miss a credit or two, you’ve been put in a penalty box that takes time to get out of. “

To date, San Diego startups have opted for traditional IPOs over SPACs. Of the 11 local companies that went public last year – which equates to most IPOs in the region in a single year in 2004 – none were SPACs, Holl said.

However, a local SPAC deal is pending. San Diego-based green energy startup Nuvve has signed an agreement to be acquired by Newborn Acquisition Corp., a Shanghai-based SPAC. The deal values ​​Nuvve at $ 102 million and is expected to close by the end of March.

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