As the tech industry witnesses fewer startups going public over the recent months, a few Artificial Intelligence (AI) startups have still chosen to make their market debuts through the risky Special Purpose Acquisition Companies (SPACs) route.

Startups Going Public Through Blank Check Firms

A SPAC is a company without commercial operations and is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring or merging with an existing company.

Since the year began, several AI-focused businesses have announced partnerships with SPACs in various sectors where mergers are anticipated including data management, diagnostics, and education.

For instance, in late April, iLearningEngines, a firm that offers training with a focus on AI-powered learning automation for corporate and educational use, revealed its intention to merge with the shell company Arrowroot Acquisition Corp. in order to list on Nasdaq at an initial valuation of about $1.4 billion.

Speaking about the acquisition, Harish Chidambaran, iLearningEngines’ existing CEO and founder, said:

We are excited to be partnering with Arrowroot given their expertise in growing enterprise software businesses. We believe the capital raised in this transaction will allow us to accelerate growth, capitalizing on the massive market opportunity in front of us.

Airship AI Holdings, a Washington-based AI startup also went public through an acquisition by shell firm BYTE Acquisition Corp.

The company, which offers an AI-driven edge video, sensor, and data management platform for government agencies and enterprises, announced the merger in March, which would place it at a valuation of about $290 million.

Another company to take this route is Spectral MD, a company that utilizes artificial intelligence to forecast how wounds would heal, which announced last month that it would go public through a merger with Rosecliff Acquisition Corp I, a SPAC.

The agreement places the company, which has offices in Dallas and London, at a market value of about $170 million.

All Eyes On Altman’s SPAC

On the other hand, some SPACs led by AltC Acquisition Corp. are yet to identify their target acquisition companies. The $450 million SPAC, whose CEO is OpenAI co-founder and CEO Sam Altman, is the most closely monitored in this category. With aspirations to find an acquisition target within two years, AltC went public in July 2021.

As July continues to draw near, that period of time is almost up unless an extension is granted. However, the company appears certain that it will acquire a target since in a quarterly report released this week, AltC stated that it “intends to complete a business combination before the mandatory liquidation date.”

Currently, the liquidation date is set for July 12, although AltC claimed it may be postponed to October 12 with a merger agreement or letter of intent which shows the potential of a business combination in view.

While the SPAC has not stated explicitly that it is seeking an AI startup to IPO, it is safe to infer that it is at least considering AI firms given Altman’s prominence in the industry.

However, as lucrative and popular as the AI industry is becoming, not all SPACs or blank check companies have succeeded in merging with a startup in the area.

One such unfortunate company is Intelligent Medicine Acquisition Corp., a SPAC that went public in October 2021 with an aim to acquire a life science business using artificial intelligence for medication discovery.

After failing to complete a corporate combination within the required time period, it announced plans to liquidate its shares three weeks ago.

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