The SPAC boom we saw in late 2020 and early 2021 may have cooled off a bit, but there are still some high-potential companies choosing the SPAC route to go public. One particularly interesting example is real estate “iBuyer” Offerpad, which is set to merge with blank-check firm Supernova Partners Acquisition (NYSE:SPNV). In this Fool Live video clip, recorded on Aug. 23, Fool.com contributor Matt Frankel, CFP, sits down with Offerpad CEO Brian Bair to find out why his company chose this route.
Matt Frankel: I want to briefly talk about your going public soon. You’re not officially public yet, although you are somewhat trading as a public company for those who are familiar with the SPAC model. Why did Offerpad use this background instead of a traditional IPO? You’re not the first iBuyer to do that by the way. It’s apparently an appealing process and why Supernova in particular.
Brian Bair: I know, it was. During that time, especially when the stock market was extremely competitive and we had a lot of different SPAC companies wanting to sponsor us to help take us public. We looked at all, we looked at staying private, we looked at going public the traditional way, and we looked at the SPAC process. For me, the most important thing was, what’s the focus on the business and our path forward? Because what we’re doing and changing the way people look at real estate, it’s not a fast game. There’s a lot of education and a lot of market share out there for people to go get. But the one thing about the SPAC process was, it’s a much faster route. There’s not as much as going the traditional route or especially staying private. What we wanted to do is basically get the car on the seaway in the most efficient and fast way that we could, so we could focus on continuing to operate the company. We got our SPAC sponsor, which was Supernova, led by Spencer Rascoff and the group over there. Was a perfect sponsor for us because one, they were operators, they understood the industry overall, they understood the space overall, but also understood the hyper growth. We want to look not just for our SPAC sponsor, as far as getting us public, but also, in addition to what can we learn from the SPAC sponsor to make Offerpad better. They really check every box on that end and they’ve been awesome partners.
Frankel: Another benefit to going public through the SPAC route is cash obviously. Generally, companies raise more cash through the SPAC IPO than they would in a traditional IPO in a lot of cases. You’re getting about $650 million, just to prove that. How do you plan to put that to work? Are you going to use that to ramp up your home buying? To build out your technology? Or how do you plan to put that to work?
Bair: Yeah, it’s a little bit of everything. We look at it in phases, one is, we’re in hyper growth right now. Right now we’ve announced 21 markets across the country. We’re in 1,500 cities and towns what we’ve announced. We just announced over four markets, seven markets this year will continue to expand that. There’s some market growth, but then there’s also the additional market penetration for increasing our buy box of the homes that we’re in and the homes that you buy in our current markets. But also there’s going to be a significant investment in our product and our technology. I hinted to it before, but how Offerpad is going to win is by the products you allow the consumer to use. That’s completely different than what they can get in, I would say the more traditional market. We can talk for an hour about all the other products that we’re going to announce, but that is something we’re really excited about because more importantly, the consumer wins and there will be massive benefit for Offerpad as well.
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