SPACs Second Act
May be exactly what capital markets need.
SEC Chair Atkins signaled on CNBC this morning that the agency would revisit SPAC (Special Purpose Acquisition Company) regulations, its raising eyebrows across Wall Street and Silicon Valley, and for good reason.
In the wake of SPAC mania peaking in 2020–2021, the U.S. Securities and Exchange Commission implemented a wave of reforms. These reforms, focused on enhancing disclosures, reducing conflicts of interest, and protecting retail investors, were a necessary course correction after years of unchecked enthusiasm. But it wasn’t all positive: SPAC activity plummeted, investor interest waned, and one of the few remaining IPO alternatives disappeared.
Now, with IPOs at multi-year lows (although Figmas recent S1 filing could change this) and broader market uncertainty continuing to depress risk appetite, a more balanced regulatory framework for SPACs may be exactly what the capital markets need.
2022 and 2023 saw a significant decline in traditional IPOs, with many high-growth companies choosing to remain private longer due to volatility, valuation concerns, and macroeconomic headwinds. According to Renaissance Capital, IPO activity in the U.S. fell over 80% in 2022 compared to 2021, one of the steepest drop-offs in modern history. While 2024 saw some signs of thawing, we remain far from a robust IPO market. 2025 we’ve started to see a little uptick, but far from where the markets need to be for us to consider it healthy, and to get much-needed liquidity to limited partners.
This creates a dilemma for investors and founders alike: fewer exits, fewer liquid opportunities, and less access to innovation for public market participants.
SPACs, when structured responsibly, offer a flexible alternative path to going public. They can reduce timeline uncertainty, enable negotiated terms, and unlock value in sectors that might struggle to attract traditional IPO underwriters. For emerging industries like climate tech, AI infrastructure, and deep tech, SPACs can provide vital bridge capital and liquidity.
But for this model to thrive again, the rules must evolve from reactionary restriction to forward-looking reform.
That seems to be the signal from Chair Atkins: not a full return to the Wild West, but rather a thoughtful reevaluation of how to preserve investor protections while unlocking innovation and deal flow.
What a Balanced Framework Could Look Like
A modernized SPAC framework might include:
Clearer disclosure standards. Focused on projections, sponsor incentives, and conflicts of interest.
Stronger post-merger accountability. Ensuring quality of the operating company and ongoing governance.
Flexible timeline options. Allowing longer de-SPAC periods under certain conditions.
Scaled requirements based on deal size. Recognizing that a $500M SPAC may carry different risk than a $5B one.
The goal isn’t to favor SPACs over IPOs or direct listings, but to allow all three pathways to coexist, each with its own guardrails, oversight, and investor profiles.
By even hinting at regulatory recalibration, the SEC is signaling to markets that innovation in capital formation is still welcome, as long as it’s done responsibly. This could reopen the door for institutional investors to re-enter the SPAC space and encourage private companies to revisit the public option.
In a time where capital efficiency, liquidity optionality, and retail inclusion all matter more than ever, a rebalanced SPAC framework may be one of the most strategic moves the SEC makes in 2025.
Growth at All Costs: The Unspoken Mandate
Let’s not forget the bigger picture. The U.S. economy is under constant pressure to grow. Politically, economically, and globally. Whether it’s AI, infrastructure, defense, or climate, public capital markets are expected to absorb and accelerate innovation at scale. But that engine doesn’t run without pathways for capital formation.
By revisiting SPAC rules, the SEC isn’t only tweaking a technical mechanism, it’s acknowledging the need for more on-ramps to growth. In a country that runs on ambition and competition, giving companies more viable paths to access public markets isn’t just smart policy. It’s national strategy. With the potential passage of the One Big Beautiful Bill, which could add trillions of debt, Americas only path forward is growth, beautiful, fast growth. This is another tool in our belt.