SPACs and Unicorns: Separating the Wheat From the Chaff

Avoid the Bandwagon, Be A Contrarian and Ask Yourself:

i. How disruptive are they? What do they do that is better, cheaper and faster than what others are already doing 
ii. Is the business model sustainable or is it just an idea or a multi-billionaire’s wishful thinking on space travel or making life multi-planetary or colonizing Mars – don’t forget he’s using Corporate Finance 101 i.e. other people’s money
iii. Who is running the show: do they have the expertise, the know how, the experience, and do they still have a raging fire in their bellies (i.e. passion); and don’t forget to ask how much they are paying themselves
iv. When will they be cash flow positive or EBITDA positive
v. How does their valuation compare with the industry average – are there any specific reasons why they should be valued at a premium to the industry.