Some might say, “Wow … you really overdid the due diligence on Heliogen”, but we wanted to make sure as an all-women lead SPAC that we got it right the first time.
Sam: Phyllis, what were the attributes that your SPAC team was looking for in a merger target?
Phyllis: We were constantly building the strategy to develop great deal sourcing capabilities. And develop a process for narrowing those companies down. We started with about 200 companies, and it was really about the power of our network. We started to look at the types of companies that would be on our radar from the beginning. And we quickly narrowed it down to 25. We had a “red flag” assessment that knocked out companies that didn’t fall into this category, but what differentiated us from other SPACS is that we were all women – the board, the management team and every advisor, all women.
Also, we decided early on to bring in third-party firms to do the due diligence on both the financial side and the tech side. So, it was easy for us to look at the 25 firms.
But when we went public, our phone started ringing off the hook. Targets were calling us because they saw the credibility of the team and they saw that this was a very different looking SPAC. And so, that 25 grew quickly, but we were still able to narrow it down and then find a target company.
Leading through an IPO
Sam: Mike, what led you to the decision to choose the path of doing an IPO?
Mike: You really have to find the right path for your company and a lot of that comes down to the board dynamics that you have, the investor profile you want and your message to the market.
Sam: What would you say was the most difficult part of navigating the IPO?
Mike: This was the first IPO for me, and my president and COO had never done an IPO directly, my CFO had never done an IPO directly. So, we were really figuring it out together.
What I was most surprised about were the actual schedule impacts once the IPO was done. There’s also this odd dynamic that as a private company, your investors ask you questions, and you answer them. I spent a lot of time with my private investors. I would text them when we signed a new account or when we hit a revenue record. When you transition to a public company, investors don’t want that level of detail.
I often joke that no one wanted to talk to me when we went public. They didn’t want to put themselves in a position to get non-public information about the company. It was quite an unusual transition.
Sam: Mike, how has being public changed the culture of the organization?
Mike: There hasn’t been much day-to-day culture shift because we’ve worked at it. As you make that transition, you really have to over-index, right? Because people have an expectation of how the culture is going to change. They almost know it’s going to change. And so, if you’re not really dedicating time and effort to over-indexing, you’re bound to have people say it’s going to change.
For me, that meant taking a Zoom link and dropping it in a public channel in Slack and saying, “I’m on Zoom for the next 20 minutes. Anybody who wants to join from around the world can do so.” And doing that at different times throughout the day, right? Making sure that you’re not getting put into a bubble because you are an executive.
What can we expect in 2022?
It remains to be seen if the IPO market will be as strong this year as last. There is still the spectre of new COVID-19 variants, supply chain disruptions and labor shortages all impacting the national economy. And we saw some slowing of both IPO activity and stock market gains in the fourth quarter. But if equity markets and economic growth remain healthy, we are optimistic about seeing a healthy pace of activity throughout 2022. We see continued strength in the traditional IPO market with a full pipeline of promising companies, especially in the tech and health/life sciences sectors. And we see opportunity for continued evolution in the non-traditional paths to public markets.
Privately held firms have more avenues available to them than ever before to reach the public market. Those paths will likely continue to evolve, to meet the needs of both issuers and public investors.