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Unboxing Chamath Palihapitiya’s SPAC offers for Latch and Sunlight Financial – TechCrunch

This morning, investor and the SPAC storyteller Chamath Palihapitiya announced two new blank check offers involving Latch and Sunlight Financial.

Latch, a SaaS company that makes keyless entry systems, has raised $ 152 million in private capital, according to Crunchbase. Sunlight Financial, which provides point-of-sale financing for residential solar systems, has raised north of $ 700 million in venture capital, private equity and debt.

We will discuss the two transactions.

There’s no escape from PSPCs for a while, so if you’re tired of watching blind pools wresting private companies from public markets, you’re not going to have a very good months to come. Why? There are nearly 300 PSPCs on the market today looking for deals, and many will find one.


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Think of the PSPCs that are increasingly hungry for sharks. As a shark becomes hungrier as the clock goes down on its trading window, it can become less selective about what it eats (go public). There are enough PSPCs on the hunt today that they are noisy even if they weren’t time-limited investment vehicles. But as their timers roll, expect their negotiation to get even more creative.

This brings us back to Chamath’s two offerings. Are they closer to the Bakkt SPAC, which led us to ask ourselves some questions? Or closer to the SPAC Talkspace, which we found quite reasonable? Let’s find out.

Keyless locks = Peloton for real estate

Let’s start with the Latch agreement.

New York-based Latch sells “LatchOS,” a hardware and software system that works in buildings where access and equipment are important. Latch’s hardware works with doors, sensors, and internet connectivity.

The company has raised a number of private tours, including a $ 126 million deal in August 2019 that valued the company at $ 454.3 million on a post-money basis, according to data from PitchBook. The company raised an additional $ 30 million in October 2020, although its final private valuation is not known.

As Chamath tweeted this morning, Latch is merging with TS Innovation Acquisitions Corp, or $ TSIA. PSPC is associated with Tishman Speyer, a commercial real estate investor. You can see the synergies, as Latch’s products fit into the commercial real estate space.

Initially, Latch is not a business that just reports future income. It has a history as an operational entity. Indeed, here is his financial data according to his investor presentation:

By making a quick match, Latch grew 50.5% from 2019 to 2020. Its software revenue increased 37.1%, while its top hardware lineup grew by over 70% during the same period. . Thus, the company’s revenue composition shifted more towards hardware revenue in 2020.

This could be due to high hardware installation costs, which could later generate software revenue; the company claims an average of a six-year software contract, so hardware revenue from new software revenue could claim SaaS revenue in the long run.

While some quickly noticed that the company is far from being purely SaaS – correct – I suspect the model that will attract investors a bit is that it looks a bit like the Peloton for real estate. How? ‘Or’ What? Peloton has significant material revenue from the start of new users, which converts to long-term subscription revenue. Latch may be similar, albeit for different customers and markets.

Under the terms of the deal, Latch will be worth $ 1.56 billion after the deal. And the combined entity will have $ 510 million in cash, including $ 190 million from a PIPE – a method of placing private funds in a public entity – from “BlackRock, D1 Capital Partners, Durable Capital Partners LP, Fidelity Management & Research Company LLC, Chamath Palihapitiya, The Spruce House Partnership, Wellington Management, ArrowMark Partners, Avenir and Lux ​​Capital. “




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