America’s “tech cash shell” boom
America's tech companies are eschewing going public through an IPO and opting to use “special purpose acquisition companies” (SPACs) – also known as cash shells – instead.

Special purpose acquisition companies (SPACs) – also known as cash shells – have “suddenly become the hottest way to raise capital, especially in tech”, says Kara Swisher in The New York Times. A SPAC raises money through an initial public offering (IPO), then uses the cash to buy a business that wants to list on the stockmarket but doesn’t want to go through the IPO process. As such, they are “essentially a back door to taking a start-up public”.
This appeals to many tech entrepreneurs, who believe that the investment banks that carry out IPOs tend to underprice them, leaving “billions on the table that should go to the companies, and not to Wall Street firms and their clients”. What’s more, most detest the hassle of taking part in an IPO: ”often they compare it to dental implant surgery”. So as the tech sector booms, so do SPACs: there have been 75 new SPAC listings in the US this year, raising more than $30bn.
There is another way to go public without an IPO, notes Yun Li on CNBC: a direct listing, when a firm simply lists its shares on the exchange. The limitation is that it can’t raise new capital at the same time – only existing investors can sell their shares. But last month US regulators approved new rules that will let firms carrying out a direct listing on the New York Stock Exchange and sell new shares on the first day of trading. This “could curb some of the enthusiasm in the booming SPAC market, as it provides similar advantages”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.
Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.
He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.
-
How high earners could boost their pension by thousands and cut childcare costs
Salary sacrifice could boost your pension by thousands, while also helping you save on childcare costs. We delve into the numbers.
-
Monzo launches 11 ETFs via Blackrock to help savers invest
Monzo customers can now invest BlackRock's iShares ETF range via its banking app, making investing more accessible to millions
-
The British railway industry is in rude health – here's why investors should jump aboard
The railway industry has bounced back from the devastating impact of the pandemic and is entering a new phase of development – and profitability
-
US and China reach a ceasefire in their trade war after talks in London
The US and China's trading relationship – the most important one in the global economy – is back on track. Will the truce last?
-
Infrastructure investing: a haven of stable growth amid market turmoil
From booming construction in emerging markets to digital and green transitions, the infrastructure sector offers security, returns and long-term opportunities
-
The costly myth of “sell in May”
Opinion May 2025's strong returns for US stocks have once again shown that putting too much weight on seasonal patterns will only make investors poorer, says Max King
-
Who’s driving Tesla?
As Elon Musk steps back from government with his eyes on the stars, investors ask if he’s still behind the wheel at his electric-car maker.
-
Investment opportunities in the world of Coca-Cola
There is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?
Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
-
'Pension funds shouldn't be pushed into private equity sector'
Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.