Welcome to our #80 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we focus on SPACs, the blank check vehicles, which raised a record $82.1bn in 2020. And why women need to build their own.
And we spotlight Cathie Wood’s ARK investment in Coinbase, the global cryptocurrency exchange which listed on the Nasdaq earlier this year.
You can review the news in brief so you stay on top of global financial, economic and investing trends.
And don’t forget to listen to The Purse Podcast with Sergey Young, a longevity investor and visionary with a mission to extend healthy lifespans of one billion people. We talk about longevity, the Longevity Vision Fund, gender-lens investing, how to invest, and how to live to 200!
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And The Purse is taking time off, but we will be back in the final week of August.
Stay safe everyone & look after yourselves.
Enjoy your summer!
Jana
SPACs: why women need to build their own
What is a SPAC and why we need women-led SPACs
SPACs, also known as blank check vehicles, raised a record $82.1bn in 2020 (US) and $180bn in 2021 (so far), according Refinitiv data.
Yet despite their popularity..
..almost half of the 151 SPAC companies have no women on their board. And women held only 15.5% of the 671 total board seats in 2020 (according to Bloomberg).
Wait. Why?
SPAC structures are negotiated in private. And therefore can more easily avoid the scrutiny of public companies around ESG goals or gender diversity. (We see the same problem in venture capital and private equity too).
When these teams are put together, the SPAC sponsors (mostly men) default to their personal network which is made up of their male peers.
And as Gillian Tett for the Financial Times rightly says, privacy breeds clubbiness.
What’s a SPAC?
SPACs are shell companies. They are set up by founders or sponsors with the aim to acquire companies and take public through a merger.
SPACs have up to two years to acquire a company, otherwise they must return the cash and interest to investors (and sponsors lose their initial investment).
Once considered an investment backwater, SPACs have entered the mainstream due to the pandemic. And it is far easier for companies to raise capital this way, compared to an IPO (initial public offering).
Most SPACs have been created in the US, but the trend is going global. And are mostly participated by hedge funds, institutional investors and family offices.
But with no real need to think outside the box, male founders and investors perpetuate the status quo: mostly white guys continue to do business with mostly other white guys.
What’s the solution? Enter women-led SPACs
According to Betty Liu quoted in Forbes:
‘Having your own SPAC is a chance to rewrite corporate America…it’s an opportunity to invest in women at the helm of publicly owned companies, build diverse corporate boards from the birth of a company, and have more women investing.’
For example, Athena..
…is led by Chairwoman Isabelle Freidheim and CEO Phyllis Newhouse. And it is one of the only entirely women-led SPACs, with a diverse, all-female team of managers, advisors and investors. Athena recently absorbed Heliogen, a leading provider of AI-enabled concentrated solar power.
The SPAC sponsors and team need to have extensive and diverse experience. This includes senior dealmaking to attract investors, experience taking a company public and operational expertise to scale a business.
Women can tap into this experience…
… by proactively reaching out to the senior women in their network. Or by creating a new network of senior women with complementary skillsets.
Plus we know (based on research) that women invest in female-led companies three times the rate men do. They are also more purpose driven, which attracts the mission-driven investor.
PWP Forward Acquisition Corp is another example of a female-led SPAC that launched in March of this year. And it is focusing on improving ‘public market access for women-forward companies and demonstrate their outperformance, leverage our sponsor’s network and capabilities, and focus on delivering attractive returns’.
And so women-led SPACs are likely to fuel:
women-led companies which are (largely) built to serve underfunded markets,
and companies centred around ESG goals.
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Dig deeper:
News in Brief
Financial news
The US Federal Reserve moves closer to decision on ‘tapering’ massive stimulus. On Wednesday, it was confirmed that they had made progress on employment goals and inflation (2% average).
US economic growth is weaker than expected, in the second quarter at 6.5% (on annualised basis).
Eurozone inflation rises above inflation target (at 2.2%) and likely to peak at 2.5%.
China stocks in the US suffer biggest 2 day wipeout since 2008. Sweeping crackdowns on its technology and education sectors has wiped $769bn in value from U.S.-listed Chinese stocks (in 5 months).
UK’s economic recovery stalled in June due to ‘pingdemic’.
Robinhood falls in its public market debut, closes at more than 8% lower at $34.2 per share.
Apple demolishes earnings expectations but stock falls after iPhone chip supply warning.
Crypto: bitcoin, ethereum & DeFi
On Monday, Bitcoin briefly surpassed $40,000 (below dropping below $37,000) upon speculation that Amazon will be accepting bitcoin as payment. However, Bitcoin is currently trading at $42,000. Ether is currently trading at $2,600.
Goldman Sachs files for DeFi and blockchain equity ETF.
Elon Musk’s Tesla holds its $1.3bn bitcoin position in Q2.
Galaxy closes venture fund of funds backed by Franklin Templeton.
Cathie Wood’s ARK invests in Coinbase shares
ARK Fintech ETF and Coinbase Global Inc
Cathie Wood has gained superstar status in the investing world: she is the Founder & CEO of ARK Investment Management (US).
Referred to as the first star in the ETF industry (exchange traded fund) valued at $6.3 trillion, Cathie’s company is made up of 8 funds, 6 of which are actively managed ETFs (a relatively new approach when she launched).
Investors have injected $34bn into ARK’s 8 funds (in the past 12 months) and withdrawn (approximately) $1.2bn since February.
Cathie is a Bitcoin enthusiast
Despite Bitcoin dropping in price from its all-time high at $65,000 in April to (currently) at approximately $42,000, Cathie is very bullish regarding the future and price of the world’s largest cryptocurrency.
Her prediction that her favourite cryptocurrency will get to $500,000-still stands.
ARK Fintech Innovation ETF…
…invests in fintech companies including Square, Zillow, Pinterest, PayPal, and Alibaba. (Net assets for the fund are currently $4.2 billion).
The ETF includes these business platforms:
Transaction Innovations
Blockchain Technology
Frictionless Funding Platforms
And based on recent data, ARK Fintech ETF bought 113,043 shares of Coinbase, the global cryptocurrency exchange.
Here’s some info on Coinbase Global Inc
Coinbase has become a standard on-ramp for new crypto investors.
Founded in 2012, Coinbase offers products including cryptocurrency investing, custodial accounts for institutions and a wallet for retail investors.
Coinbase listed on the Nasdaq stock exchange in April of this year and was valued at $112bn (at the time of listing).
Coinbase shares opened at $381 each but are priced at $240 per share (today).
The direct listing was a landmark moment for the crypto industry and some regard Coinbase as this ‘decade’s Microsoft or Netscape’.
Bitcoin and ethereum made up 56% of Coinbase’s 2020 trading revenue.
Coinbase takes a percentage (or fee) from every transaction on the platform. So irrespective of whether the price of crypto goes up or down, Coinbase generates revenue from retail and institutional customers buying and selling their crypto online.
Crypto skeptics still refer to Bitcoin as a ‘speculative asset’ despite Bitcoin appreciating 200%+ per annum (over the last 10 years).
Why invest in a crypto exchange?
Investing in a crypto exchange like Coinbase gives investors indirect access to the crypto market without exposing them to the price volatility.
Coinbase’s business model is based on fees generated per transaction. The greater the volatility, the more users tend to trade (buy or sell).
Institutional investors like MicroStrategy, Tesla and Square have invested in Bitcoin which is driving crypto adoption and activity by the broader industry (as well as retail investors).
Read more:
The Purse Podcast
Longevity, mission-driven investing and how to live to 200
Why invest as a VC?
The definition of longevity
Women's health: an underserved market
Gender-lens investing and female investors
The Longevity Visionary Fund
Why invest in disruptive businesses?
How is data and technology enabling this disruption?
How to diversify risk in a fund
Investing for impact and the collaborative vs competitive mindset
What makes a good investor?
Sergey's personal plan to living until 200 years of age
2050: what is possible as a result of Sergey's work and investments?
Listen on all podcasting channels including iTunes, Spotify and Anchor.
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Gender pension gap: how women can boost their requirement pot
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We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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The Purse provides content for informational purposes only, we do not recommend products or services or provide investment advice. Please do your own research or speak to a financial advisor.
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