In 2021, about 200 businesses merged with special purpose acquisition companies as a way to go public. Hippo Holdings, an insurtech, now wishes it hadn’t taken part in the so-called SPAC euphoria.
Hippo was valued at $5 billion in March 2021 when it announced its combination with Reinvent Technology Partners Z, a SPAC backed by Reid Hoffman, cofounder of LinkedIn, and Mark Pincus, founder of Zynga. SPACs, at the time, were wildly popular due to the advantages promised by blank-check companies. Merging with a SPAC was believed to be a quicker, and cheaper, route to public markets compared with a traditional IPO. Companies using SPACs could also provide future guidance, which is not allowed with traditional offerings.
