NewHavenBIZ

n e w h a v e n b i z . c o m | A p r i l 2 0 2 1 | n e w h a v e n B I Z 17 107 Old Windsor Road, Bloomfield, CT 06002 | 860.242.8586 | Fax: 860.242.8587 pdsec.com THINK • PLAN • BUILD Another Successful Project by PDS WALLINGFORD TRUCK STORAGE FACILITY | WALLINGORD, CT The new DPW facility for the Town of Wallingford is a 10,740 square foot pre- engineered metal building. The project included 10 truck bays with overhead doors, 4' high concrete kicker wall, clear span, office space, lockers, restrooms, training room, mechanical room, tool storage, wash bay and a mezzanine. SPOTLIGHT ON: MUNICIPAL TOTAL PROJECT SIZE: 10,740 SF e deal flow — including from celebri- ties like Shaquille O'Neal and Alex Rodri- guez who are advising or launching SPACs — has caught the attention of regulators. In late March, Reuters reported the SEC had opened an inquiry into the SPAC boom, asking Wall Street banks about their dealings with SPACs and how underwriters are managing risks involved. With many more SPAC stocks on the market, Ethridge said he will be watching how they perform. In recent years, post-merger SPAC stocks have underperformed the overall IPO market, according to Greenwich-based Renaissance Capital. "Let's see how this plays out over time," Ethridge said. "e hope from folks like me who are capital markets professionals is that you'll have a product with a SPAC that's more durable than it's been in the past." Bioscience legend Rothberg, a chemical and biomedical engineer, is a bioscience legend in his native state of Connecticut, having founded com- panies such as CuraGen, Ion Torrent and 454 Life Sciences, which eventually sold for a combined $609 million. More recently, he has led his smart medical device accelerator, known as 4Cat- alyzer, which has birthed eight companies, including the recent SPAC merger targets Butterfly Network and Quantum-SI. ose two companies grossed combined proceeds of more than $1.1 billion, which Rothberg said was likely more than they would have raised through the traditional IPO process, based on average results for similarly-sized firms. Rothberg's companies could have gone public through a traditional IPO, but he said that process would likely have raised less capital and meant slower growth. It's not all about money though, Rothberg said. He also connected with SPACs formed by two experienced management teams — Glenview Capital Management and HighCape Capital. "In business, you try to find someone that complements you, accelerates your ability to work in parallel and it doesn't matter that there are 550 SPACs out there, you have to find the one that is right for your problem," he said. "SPACs right now are the best access to capital when there is a partner that has the skills you don't, has access to customers you don't have, or has the right executive team." Rothberg said two other companies in his 4Catalyzer accelerator — bedside MRI developer Hyperfine and brain-monitoring technology maker Liminal — could be future SPAC targets. A SPAC sponsor's perspective Kevin Rakin, a partner at New York- based growth equity fund HighCape and CEO of its SPAC merging with Quantum-SI, has been in the Connecticut entrepreneurial scene for years. He is actually based in Fairfield County and sits on Connecticut Innovations' bioscience investment fund board of directors. His history with CI goes back to the 1990s when the agency invested in his first startup, New Haven- based Genaissance Pharmaceuticals. "Connecticut is a great pond to go fishing in," Rakin said in a recent interview. Today, CI has a stake in HighCape through a $3 million investment in a relatively new fund. At the time HighCape was raising the fund, a SPAC wasn't the intent, Rakin recalled. "It's funny, we're not really trend guys or momentum guys," Rakin said of his firm. "Our idea is you build a quality firm and you will achieve an exit." However, once Rakin and his team got more familiar with SPACs, they saw lots to like. For example, aer the SPAC IPO, they could corral a complementary pool of capital from big investors, known as a private investment in public equity (PIPE) round. Rakin's team was also used to investing in earlier-stage companies and a SPAC gives them the chance to shepherd a firm through an IPO process and further into its life cycle. Rakin said he's known Rothberg for more than 20 years. HighCape could have invested in an IPO, had Quantum-SI gone that route, but the SPAC structure provided an opportunity for Rakin to get more directly into business with someone he greatly admires. "Jonathan is a genius who understands the entrepreneurial life sciences world," Rakin said. Before teaming with Rothberg, Rakin said he and his team vetted more than 40 companies to varying degrees, and saw firsthand the demand that's being created by having so many SPACs on the hunt. "We saw signs of an overheating SPAC market," he said. In fact, HighCape had a dra letter of intent to merge with a different company when another SPAC swooped in with a larger offer. "I was shocked at the valuation," he recalled. "I said 'I can't do it, we haven't even done the due diligence yet.' " Rakin is among those who suspects there will be a drop in SPAC valuations at some point, but he thinks the deals will stick around for the long haul to some extent. "I think it's an instrument that's here to stay for the right kind of investor, which I think HighCape is," he said. n Kevin Rakin n Tech - $85.55B n Cannabis - $1.79B n Energy - $10.29B n Health care - $20.58B n Fintech - $21.08B n Tech, media, telecom - $4.49B n Sustainability - $9.21B Hot SPAC sectors The total number of active SPACs are more heavily focused on certain industries, including technology, fintech, and health care, according to SPACtrack.net. Source: SPACtrack.net Total SPAC IPOs 2020 - 248 2021 ytd - 296 Record-breaking year for SPACs Total IPO proceeds 2020 - $82.97B 2021 ytd - $95.87B Source: SPACtrack.net

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