Hartford Business Journal

16 Hartford Business Journal | April 5, 2021 | HartfordBusiness.com Let us help get your people back to work! h t t p : //o f f e r. g o e n c o n . c o m / h b j 1 2 6 5 W o o d e n d R d , S t r a t f o r d , C T 0 6 6 1 5 | 2 0 3 - 6 8 3 - 4 9 9 8 The CDC states that a building's heating, ventilation & air system is the main way to fi ght indoor air contamination. Is your system up to the task? For over 50 years, we have helped to improve indoor air quality in businesses throughout Connecticut. We can help you too. 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, after 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 draft 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. SPAC deal totals Tech $85.55B Cannabis $1.79B Energy $10.29B Health care $20.58B Fintech $21.08B Tech, media, telecom $4.49B Sustainability $9.21B The money raised by active SPACs is targeting these industries. Source: SPACtrack.net Biggest Industry SPAC Targets William Fish Guilford scientist Jonathan Rothberg is merging two of his companies into SPACs and he said there could be more to come. PHOTO | CONTRIBUTED

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