A special-purpose acquisition company co-founded by former Y Combinator CEO Sam Altman has cut its large fundraising target by over half, at a time of lowered activity in the SPAC market brought about by an accounting crackdown from the US Securities and Exchange Commission (SEC).

• This March, Altman along with investor Michael Klein formed an SPAC named Altc Acquisition Corp with a target to raise $1bn from an IPO. Now, that target has been cut down by much to $400mn, as indicated by an amended SEC filing.

• The 60% cut in Altc’s fundraising target points to a SPAC market no longer with heightened investor enthusiasm after a crackdown from regulators. The SEC recently issued a warning on accounting practices by SPAC sponsors, particularly on stock warrants, and also on the legal risks of the brash forward-looking statements often issued by SPACs to their shareholders.

• Apart from the SEC’s crackdown, there’s also been concerns of too many SPACs chasing too few potential targets in the markets, leading to a drop in enthusiasm for new SPACs.

• At $1bn, Altc Acquisition Corp was looking towards being one of the biggest SPACs on the public markets, led by a duo of Sam Altman and Michael Klein, the latter a serial SPAC mogul whose SPAC is taking electric carmaker Lucid Motors public in a $24bn deal, the biggest SPAC deal on record.

• Now, Altc has settled down to raise $400mn, a target on par with many SPACs on the market.

• Altc Acquisition Corp will list on the New York Stock Exchange under the symbol “ALCC.U”. After its IPO, a team led by Altman and Klein will lead the search for a merger target.

• Altman is the former CEO of Y Combinator, a reputed startup incubator that’s helped build many successful tech companies, and Klein is a reputed deal-maker in the finance world. Therefore, it doesn’t seem like they’ll have trouble seeking out merger targets for their SPAC.

• Although the market for new SPACs have cooled down, the one for existing SPACs is still hitting its strides and churning out big mergers such as the recent $15bn deal to take biotech startup Ginkgo Bioworks public. Ginkgo is an alum of Altman’s Y Combinator.

Photo: Sam Altman, credit: TechCrunch, licensed under CC BY 2.0

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