With an IPO, you typically pay investment banks a fee of 1-7% of the amount of money raised.
The SPAC, on the other hand, pays investment banks a fee of 5.5% of the money raised and in turn, gives its sponsor—the famous investor or operator who runs the SPAC and who finds a target company to take public—20% of its stock virtually for free, which is then passed on to that target company.
SPAC is the hottest thing in Silicon Valley for 2020! Here is just a shortlist of SPACs founded by some well-known technology veterans this year:
Reinvent Technology Partners by Reid Hoffman (founder of Linkedin), Mark Pincus (founder of Zynga), and Michael Thompson