Going public via SPAC, a viable capital strategy for IPO-ready fintech companies

KeyBanc Capital Markets FinTech Managing Director, Tim Monnin, March 2021

Going public via SPAC, a viable capital strategy for IPO-ready fintech companies

When financial technology (FinTech) company Billtrust was ready to execute its strategy to be the nation’s leader in accounts receivable (AR) automation, senior executives had a few traditional options: return to private equity investors for funding, pursue an Initial Public Offering (IPO), or consider a merger or sale to a private equity or strategic buyer.

They chose instead to pursue a merger with a Special Purpose Acquisition Company, or SPAC, and went public in mid-January.1 Billtrust is one example of a recent acceleration of deals involving SPACs in the public market. In fact, the volume of mergers through SPACs in the first quarter of 2021, totaling $166 billion, already exceeds that of all of 2020.2

As part of KeyBanc Capital Markets 2021 Emerging Technology Summit, Tim Monnin, Managing Director and head of FinTech investment banking, spoke with Chuck Bernicker, CEO, South Mountain Merger Corp.; Steve Pinado, President, Billtrust; and Gary Simanson, CEO, Thunder Bridge Capital Partners, about what emergent FinTech companies can gain from going public through a SPAC merger, delving into the Billtrust and South Mountain experience as a primary example.

What is a SPAC?

SPACs are a type of “blank check company” – companies with no commercial operations or business plan that are formed specifically to raise capital from the public equity markets for the purpose of acquiring an existing company.3 SPACs often pursue early-to-mid-stage companies in a specific category, but it is not a requirement, and raise funds in a set timeframe. SPACs are speculative by nature and are regulated by the SEC. SPACs have become an increasingly popular vehicle as an alternative to a traditional IPO or as an alternative to a recapitalization over the past three to five years, but especially in the past 18 months. FinTech has been a particularly active sector with over 25 announced merger transactions.

Some background: the basics of the SPAC process:

  • The SPAC files an IPO registration statement with the SEC.
  • The SPAC sponsor, or management team, funds the offering expenses and working capital during the M&A process.
  • IPO proceeds are held in a trust account until released to fund the acquisition or merger of a target business – known as the business combination.
  • The SPAC may arrange committed debt or equity financing through a Private Investment in Public Equity (PIPE) to finance a portion of the purchase.4
  • SPAC shareholders may choose to revert shares to the SPAC or remain invested in the new business.
  • Once the business combination is approved by shareholders in the SPAC, it begins the “De-SPAC” process in which the target business becomes a publicly traded operating company that carries out its business plan.

Benefits of SPACs as a capital strategy

SPACs offer more control for sellers over pricing and deal terms through the definitive merger agreement than a traditional IPO for private companies that are looking to become public. The SPAC assemblers are responsible for attracting capital for the IPO and identifying a business target business that meets its objectives, bringing competitive insights, market research and deal experience to the table.

“What’s most important is that you have an opportunity to bring an asset to public equity investors that they otherwise don’t get a chance to see, early-stage companies in a very-specific niche,” said Bernicker.

He says the South Mountain approach was to bring in fundamental investors who would remain shareholders in the merged company earlier in the process. KBCM’s Monnin pointed out that as SPACs have a more targeted approach to the business they’ll acquire, more longer-term investors will invest based on the track record and acquisition criteria of the SPAC assembler.

“Some believe it is better than an IPO because you can catch a company at its inflection point of growth,” added Simanson. “You’re not able to tell that story through a typical IPO process, because you can’t use projections.”

Simanson says where the SPAC structure works best is earlier stage companies in a high secular growth industry. The ideal company is outperforming its peers in the industry, has an experienced management team that is ready to go public, and values what the SPAC team brings in research and connection to a vetted and highly capitalized investor base.

The Billtrust SPAC story

Billtrust fit the model profile for a SPAC target company in FinTech. It was founded in 2001 and had grown to more than 500 employees, operating in markets nationwide, with an experienced leadership team. Billtrust offered order-to-cash automation solutions for businesses and was poised to become the national leader in AR automation at a time when business-to-business payments were rapidly digitizing. Bernicker says public equity investors were ripe to execute in the payments sector, but opportunities were limited.

For Billtrust, Pinado says the SPAC route was attractive because it offered the ability to raise more capital than the company might privately, and reduced the frequency of going to the private equity market. Plus, it gave Billtrust the ability to expose public market investors to how they intended to tackle the TAM (Total Addressable Market) they had identified.

“The SPAC allowed us to execute on a grander vision with greater pace than we would have been able if we continued on the PE road,” said Pinado. “The vehicle allowed us to run the business and attack a tremendous market opportunity in a more efficient way.”


He describes the process – from initial consideration to eventual deal – as a “journey of knowledge and skepticism that we disproved over time.” He says that the PIPE was a “clincher” that they were doing the right thing. They had a valuation they were comfortable with, a story that was resonating on the public markets, and a certainty that the deal would happen. The process began in mid-August 2020 and by mid-January 2021, Billtrust was trading publicly under the ticker BTRS.

Bernicker says the process centers not on the SPAC, but on providing the capital strategy to execute what the target business is trying to accomplish. “The goal for Billtrust wasn’t to be a public company, it was to be the leading AR automation company. This was a logical step in the journey.”

The de-SPAC transition went smoothly for South Mountain and Billtrust because the shareholders were aligned on this goal and wanted to provide the long-term foundation for growth. More than 70% of the capital investors stayed on after the business combination.

SPAC momentum speeds along

For private companies ready to go public, SPACs bring speed and certainty to the process – the likelihood of getting out successfully at a pre-determined price, said our SPAC Sponsor panelists. More investors are taking a shine to the vehicle, too – especially with seasoned sponsors that have executed successful deals, who can bring them opportunities in niche categories that they wouldn’t otherwise see.

KeyBanc Capital Markets is an integrated source for capital-raising, strategic advisory and industry expertise providing customized solutions, including serving as a financial and capital markets advisor throughout the SPAC process.

For more information about SPACs or other capital solutions, reach out to your investment banker. For more information on KBCM equity conferences and to be considered for an upcoming conference, connect with Corporate Access.

About the 2021 Emerging Technology Summit

After a tumultuous 2020 in which technology outperformed during a year of multiple crises – health, economic and social – the virtual Summit focused on what's next for the sector. We brought together investors, executives and founders from top private and public companies, and industry thought leaders to discuss the role and opportunities for technology as we progress toward the "new" normal. Attendees included 650+ institutional investors, 450 private equity/venture capital corporate development investors, 125+ private companies, and 30 public companies for 67 Fireside Chats/Presentations, 10 panels, and 3 Keynotes.


Crunchbase (March 5, 2021) “Here’s Whose Gone Public in 2021 (So Far)” https://news.crunchbase.com/news/heres-whos-gone-public-in-2021-so-far/


Business Insider (March 14, 2021) “The $166 billion of SPAC deals in the 1st quarter exceeds all of 2020.”


U.S. Securities and Exchange Commission (Dec. 10, 2020) “What You Need to Know About SPACs – Investor Bulletin” https://www.sec.gov/oiea/investor-alerts-and-bulletins/what-you-need-know-about-spacs-investor-bulletin


Harvard Law School Forum on Corporate Governance (July 2018) “Special Purpose Acquisition Companies: An Introduction” https://corpgov.law.harvard.edu/2018/07/06/special-purpose-acquisition-companies-an-introduction/


Nasdaq.com (January 13, 2021) Billtrust SPAC Merger News: 11 Things to Know About BTRS Stock as Shares Begin Trading Today https://www.nasdaq.com/articles/billtrust-spac-merger-news%3A-11-things-to-know-about-btrs-stock-as-shares-begin-trading

This article is for general information purposes only and does not consider the specific investment objectives, financial situation, and particular needs of any individual person or entity.

KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp® and its subsidiaries, KeyBanc Capital Markets Inc., Member FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A.

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