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XColumn: Why SPACs Are Today’s Best Option for an IPO
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

I have long been a proponent of going public because I believe it creates stronger, more disciplined companies that deliver greater shareholder value. It's great to see the pendulum in the founder and venture capital community swinging away from the "stay private longer" attitude that dominated tech over the last decade.
That said, the traditional IPO listing path has many shortcomings. I experienced this firsthand in 2011 when we took Zillow public. The cover price on the original S-1 was $12-$14 a share, but we upped it to $14-$16 due to strong demand on the IPO roadshow. We priced it at $20 a share, only to watch the first trade open at $60 that day. (Note: Zillow has since done a 3-for-1 stock split, so divide these numbers by three if you're trying to compare it with today's ~ $100 stock price.)
So on what should have been a day of high-fives and champagne, I couldn't help but feel disappointment that we left a huge amount of money on the table by underpricing our IPO. 🤦 Facepalm.
Our employees and our venture capital owners were penalized by this broken system. And it's not just the Zillow IPO — this problem is systemic; the typical tech IPO trades up by 43% one day later. That's a massive amount of money to leave on the table for an issuer.
Direct listings provide a second path to a public listing, and they typically avoid the underpricing issue of a traditional listing. But they have their own set of shortcomings, including the inability of the company to raise primary capital in the offering.
SPACs — Special Purpose Acquisition Companies — offer a third way, and remedy many of the problems with IPOs, while offering some new benefits, including the ability for a company to provide financial projections at the time of the SPAC IPO, when the private company merges with the public SPAC. In addition, the SPAC model offers a quicker, more certain path to going public. With the launch of Supernova Partners Acquisition Company (yes, our acronym is "SPAC"), my partners and I are creating that path for a company in the broader tech sector.
But going public by merging with a SPAC is just an express route to basecamp. Being a fast-scaling, successful public company is the summit. I know this because I've been up that mountain.
From the point we went public at Zillow, we navigated 16 acquisitions — including that of another public company who was our biggest competitor. We grew our employee base 10-fold in six years. We pulled off a complex business pivot. And most critically, we protected our culture from the volatility of the stock market and kept our people focused on our mission. The internal name for the Zillow IPO in 2011 was "Project Step," because it was just a step along the way. I've seen firsthand that going public is the beginning, not the end.
The transition from being privately held to being publicly traded is like graduating from college and entering the real world and the job market. Welcome to the big time. And for a newly public company, it's a scary world out there, full of potential facepalm moments. The right mentors, directors, and advisors can make a huge difference during those first few years as a public company. And that is yet another benefit of going public through a SPAC: you get the benefit of the experience which the sponsor group provides. In Supernova's case, we have assembled a world-class team with diverse skills available to help whichever company we take public. We are player-coaches who have all excelled on the field before, and are now excited to help shepherd a company and help them avoid facepalm moments of their own.
There are many SPACs (and more every day), but not all are created equal. Some teams are Wall Street-heavy and exist only to take a company public, exploiting a private-to-public valuation arbitrage opportunity; some are led by Silicon Valley founders who will act as advisors for a longer period of time. Very few combine both. With Supernova, my partners and I, along with our board, together create a Swiss Army knife of experience in company building, culture building, marketing, finance, deal-making, product design, tech, capital markets and operations.
We know the journey to IPO and beyond is filled with facepalm crevasses that can be avoided with an expert guide at your side. Our operations and managerial experience, combined with our mentoring and coaching of founders and executives over two decades, will help chart a path toward long-term value. Personally, this is the beginning of a very exciting journey in my career as it combines all of my passions — investing, mentoring and coaching — with my experience as a seasoned CEO, all together with an unparalleled team I'm proud to call partners.
Spencer Rascoff is the co-Chair of Supernova Partners Acquisition Company and the co-founder of dot.LA.
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Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
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This Week in ‘Raises’: Improvado Hauls $22M, Clearlake Launches $14B Fund
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
This week in “Raises”: A pair of Web3 platforms for gamers landed funding, as did a Manhattan Beach medical startup looking to bolster primary care via nurse practitioners. Meanwhile, a Santa Monica-based investment firm launched its seventh fund with more than $14 billion in dry powder.
Venture Capital
Improvado, a marketing data aggregation platform, raised $22 million in a Series A funding round led by Updata Partners.
Web3 gaming platform FreshCut raised $15 million in funding led by Galaxy Interactive, Animoca Brands and Republic Crypto.
Medical startup Greater Good Health raised $10 million in a funding round led by LRVHealth.
Joystick, a Web3 platform for gamers and creators, raised $8 million in seed funding.
Open source data protection company CipherMode Labs raised $6.7 million in seed funding led by Innovation Endeavors .
Mobile phone charging network ChargeFUZE raised $5 million in seed funding led by Beverly Pacific, TR Ventures, VA2, Jason Goldberg and Al Weiss.
Polygon, a startup aiming to better diagnose children with learning disabilities, raised $4.2 million in seed and pre-seed funding led by Spark Capital and Pear VC.
Pique, a virtual women's sexual health clinic, raised $4 million in a seed funding round led by Maveron.
Psudo, a sneaker startup that utilizes recycled water bottles and 3D sublimation printing to create its shoes, raised $3 million in a seed funding round led by SternAegis Ventures.
Funds
Santa Monica-based investment firm Clearlake Capital Group raised $14.1 billion for its seventh flagship fund.
Raises is dot.LA’s weekly feature highlighting venture capital funding news across Southern California’s tech and startup ecosystem. Please send fundraising news to Kristin Snyder (kristinsnyder@dot.la).Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
LA Tech ‘Moves’: New Head of Originals at Snap, New President at FaZe Clan
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
“Moves”, our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.
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FaZe Clan brought on Zach Katz as the gaming and media company’s new president and chief operating officer. Katz was previously the chief executive officer of the music tech investment fund Raised in Space Enterprises.
TikTok brand factory LINK Agency promoted Dustin Poteet to chief creative officer. Poteet was previously creative director at the firm.
Livestream shopping platform Talkshoplive hired Tradesy co-founder John Hall as its chief technology officer. Universal Music Group Nashville's former vice president of digital marketing, Tony Grotticelli, also joins the company as vice president of marketing.
Anjuli Millan will take over as head of original content at Snap after three years of overseeing production for the division.
Tech and media company Blavity hired Nikki Crump as general manager of agency. Crump joins the company from Burrell Communications Group.
O'Neil Digital Solutions, which provides customer communications and experience management for the health care industry, hired Eric Ramsey as national account sales executive. Ramsey joins from T/O Printing.
Investment firm Cresset Partners named Tammy Funasaki as managing director of business development. Funasaki previously served as head of investor relations for Breakwater Management.
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Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
Snapchat’s New Controls Could Let Parents See Their Kids’ Friend Lists
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Snapchat is preparing to roll out enhanced parental controls that would allow parents to see who their teenagers are chatting with on the social media app, according to screenshots of the upcoming feature.
Snap’s parental controls.
Courtesy of Watchful.
Snapchat is planning to introduce Family Center, which would allow parents to see who their children are friends with on the app and who they’ve messaged within the last seven days, according to screenshots provided by Watchful, a product intelligence company. Parents would also be able help their kids report abuse or harassment.
The parental controls are still subject to change before finally launching publicly, as the Family Center screenshots—which were first reported by TechCrunch—reflect features that are still under development.
Santa Monica-based Snap and other social media giants have faced mounting criticism for not doing more to protect their younger users—some of whom have been bullied, sold deadly drugs and sexually exploited on their platforms. State attorneys general have urged Snap and Culver City-based TikTok to strengthen their parental controls, with both companies’ apps especially popular among teens.
A Snap spokesperson declined to comment on Friday. Previously, Snap representatives have told dot.LA that the company is developing tools that will provide parents with more insight into how their children are engaging on Snapchat and allow them to report troubling content.
Yet Snap’s approach to parental controls could still give teens some privacy, as parents wouldn’t be able to read the actual content of their kids’ conversations, according to TechCrunch. (The Family Center screenshots seen by dot.LA do not detail whether parents can see those conversations).
In addition, teenage users would first have to accept an invitation from their parents to join the in-app Family Center before those parents can begin monitoring their social media activity, TechCrunch reported.
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.