3 Things I Learned About SPACs Using Knowledge Graphs
As the craze for SPACs continues, I decided to take a closer look at the data behind the headlines. I used knowledge graphs to investigate the people and organizations behind the success of SPACs, which proved a powerful way to represent the data.
Two to Tango: SPACs and Banks
SPACs rely on banks and financial institutions to help them go public. Banks act as underwriters, ensuring SPACs raise the amount of capital needed to IPO, and take on financial risk for a fee. The leaders of these SPACs then have two years to acquire a company; if they don’t succeed, they must liquidate the SPAC and return all the money to investors.
Citigroup, Goldman Sachs, and Credit Suisse are the biggest SPAC underwriters, as seen in the graph above. Citigroup is a clear market leader: its nearly $50 billion dollars in underwriting represents around 20% of all SPAC deals to date.
Top SPAC Players
The rate at which these underwriters close deals is notable, too. JP Morgan and Jefferies are the lead sprinters, followed by Goldman Sachs, all significantly quicker to market than Citi.
Of SPACs and Men
What about the people behind SPACs? Is it necessary to be a male Ivy League graduate to get in on the action?
We built a couple of additional knowledge graphs to explore the key players and market leaders in SPACs.
As seen in the graph above, nearly 30% of all SPAC leaders went to an Ivy. Of those, two-thirds graduated from just two universities: Harvard and the University of Pennsylvania.
To put that in perspective, the 8 Ivy League schools make up less than 0.2% of the United States’ 5,300 higher education institutions.
Women are largely underrepresented in the space, too, as seen in the graph below. Only 12.5% of SPAC leaders are female.
True, the U.S. Financial Services industry has always been notoriously dominated by men — but women make up over 34% of all financial analysts.
The SPACs frenzy seems to prove that the more things change, the more they stay the same. The trendy new approach to raising capital through an IPO suffers from some of the oldest problems in the world of finance: educational elitism and a severe gender bias.
In summary, the three key takeaways from building a SPAC knowledge graph:
- Citi is the top player in the SPAC environment, however JP Morgan, Jefferies, and Goldman Sachs are impressive with their quickness to market.
- The strength of the Ivy League network is unparalleled, making it that much harder for those outside of “the club” to get in on the SPAC fun.
- There is a clear gender bias in U.S. financial services, and an even more severe one within the SPAC community, as women are almost 88% less likely to lead a SPAC than their male counterparts.
KgBase’s no-code knowledge graphs are innovating the way we visualize relationships between data points. We were able to unlock key findings between SPACs and their leaders, as well as the financial institutions offering underwriting services to bring these companies public.
If you are interested in learning how to derive critical insights using KgBase’s no-code knowledge graph, check out more here.
