Referring to those early-2020s boom years as “frothy and crazy,” Klymochko explained that the SPAC wave rose “hand in hand with the whole meme stock boom.” Inevitably, the wave crashed, taking many of these companies down with it.
This time, however, there’s a slew of new SEC requirements meant to legitimize and de-risk SPAC structures, alongside a growing set of capital intensive industries — nuclear, space, artificial intelligence, and quantum computing — in urgent need of cash. Last year, SPACs raised $25.8 billion, a nearly three-fold increase over 2024. And the momentum has continued, with SPACs (also known as blank check companies) outraising traditional IPOs in the first quarter of 2026. It’s a far cry from the peak of the earlier wave, when SPACs raised $144.5 billion in 2021, but it certainly signals that investors are getting over their post-Covid aversion to this market mechanism.
Once again, climate tech companies are jumping onboard. Deep tech startups with long commercialization timelines and bipartisan favorability are natural SPAC candidates, and these days that means nuclear. Inspired, perhaps, by the Sam Altman-backed small modular reactor startup Oklo’s speculative, volatile, but generally successful 2024 SPAC, other SMR companies such as Terrestrial Energy and Newcleo are following suit. Terrestrial began trading last April, while Newcleo plans to list later this year.
Microreactor companies such as Terra Innovatum and Hadron Energy have also listed via SPAC, while fusion company General Fusion plans to close its blank check deal next month. All are, unsurprisingly, billing themselves as data center energy solutions. ONE Nuclear Energy, a company currently focused on building natural gas plants for data centers, even appears to be leaning into its misnomer of a name to bolster its SPAC, which has yet to close.
But the trend isn’t limited to nuclear — earlier this month, solid-state battery startup Factorial Energy went public via SPAC, while nickel-zinc battery producer ZincFive announced last week that it plans to follow suit later this year. Controlled Thermal Resources, a lithium extraction and geothermal power company, also plans to SPAC in the second half of 2026, in a deal that values the company at $4.7 billion.
“I feel like in the private market these days, there’s only money for AI and nothing else, so it certainly makes sense if you’re not an AI company to consider this vehicle as a way to raise a significant amount of capital,” Klymochko told me.
Indeed, as late-stage funding concentrates around AI, the companies best positioned to pursue traditional IPOs — the likes of SpaceX, Anthropic, and OpenAI — are also those that have already managed to raise tremendous sums in the private markets. Even geothermal startup Fervo, by far the most hyped climate tech IPO of the year, raised about $1.5 billion from private investors before going public and netting nearly $2 billion more. This dynamic can leave a financing gap for some smaller but promising companies, which SPACs can help fill.
As ZincFive CEO Tod Higinbotham explained, “We just weren’t big enough. We weren’t asking for enough capital.” The company has spent the past decade developing easily recyclable, low-carbon batteries that provide backup power for traffic lights and other transit systems. More recently, it’s shifted its focus to providing data center backup power, and is now landing the kind of large orders from hyperscalers that it’s long sought. While ZincFive has managed to raise roughly $350 million from private investors over its 10 years in operation, fulfilling its growing orderbook required quickly securing more capital.
What Higinbotham found when he tried the usual route, however, was that a $50 million to $150 million fundraising round fell into a range that many private equity investors considered “way too small.” Most were looking for larger deals, and the terms they offered the startup meant that “we would dilute ourselves out of our own company,” he told me. Furthermore, while ZincFive is revenue-generating, it has yet to turn a profit, making it more difficult to find private investors willing to fund its scale-up.
Ultimately, the need to capitalize on the data center buildout and the private market funding gap changed Higinbotham’s mind about going public via SPAC, a route he’d previously assumed he would never pursue. He does think the way that ZincFive is going about it, however, sets it apart from some of the industry’s riskier bets.
For one, ZincFive already has a real, revenue-generating product and a full customer orderbook. Secondly, it has $100 million in committed capital lined up through a mechanism known as a PIPE, or Private Investment in Public Equity. That means a group of investors has already agreed to buy shares directly from the company once it goes public in the latter half of this year.
That’s not always the case with SPACs, and having a guaranteed PIPE actually sets ZincFive apart from many other companies in its position. In a typical SPAC deal, a shell company raises money in its IPO and holds it in trust until it can merge with a private company, at which point that money essentially becomes theirs. But there’s a catch: The investors in the shell can opt to take back their money before the merger closes. If enough do that, a company going public via SPAC might wind up with a fraction of the cash it expected.
ZincFive, by contrast, isn’t counting on trust money to make its SPAC worth it; the $100 million PIPE alone provides all the near-term capital it needs.
The fact that the SEC tightened SPAC regulations in 2024 also provides Higinbotham with more peace of mind. Whereas five years ago, pre-revenue startups were allowed to make outlandishly bullish projections with minimal supporting evidence, the new rules increase the legal risks associated with misleading forecasts. They also require greater disclosure around things like sponsor incentives — the financial motivations of the shell company’s founders — and potential shareholder dilution, making SPAC mergers look more like traditional IPOs and lengthening the time it takes for transactions to close.
Factorial Energy, a pre-revenue solid-state battery company, hit the public market last week with $100 million in PIPE financing. Since its founding in 2019, the startup has raised about $245 million in venture funding and secured strategic investments from leading automakers including Mercedes-Benz, Stellantis, Hyundai, and Kia, all of whom seek to use Factorial’s tech in electric vehicles to achieve higher energy density, longer range, and faster charging. But the tech has yet to scale or become cost-effective for major automakers or earlier markets like defense drones — an inflection point that requires major capital investment.
Factorial’s CEO Siyu Huang told me she saw a SPAC as the quickest, easiest way to secure the funding her company needed to stay afloat. “It took us three weeks in between Thanksgiving and Christmas to have that capital committed,” she said. The full SPAC process, of course, took longer, but locking in that financing early was pivotal for planning the company’s trajectory. “In six months the world might be very different,” Huang said. Might as well strike when the market is hot — after all, a year-plus IPO process would have exposed the company to a range of shifting variables that could have threatened its market debut.
Not to mention, the company didn’t have a year to spare. In its SEC filing, Factorial made it clear that prior to its PIPE financing and trust proceeds, its existing liquidity “was not sufficient to fund operations for at least twelve months.” Like those of other hardware companies on the long road to commercialization, Factorial’s SPAC filing makes for a pretty bleak read, underscoring the startup’s precarious, early-stage position. As it goes on to state, Factorial “has experienced net losses and negative cash flows from operations since its inception,” and “expects it will continue to incur significant costs including research and development expenses related to its ongoing operations until it successfully develops a commercial product.”
It’s pretty boilerplate disclosure language. But seeing it repeat across these myriad filings reveals a consistent reality: Despite these companies’ best marketing narratives, many remain highly speculative, with success dependent on multiple technical, financial, and regulatory milestones breaking in their favor. For example, SMR developer Terrestrial Energy admits that “the aggregate capital raised from the proposed interim and PIPE financings will not be sufficient to finance the total capital required for the business plan,” while Terra Innovatum writes that “based on our recurring losses and expectations to incur significant expenses and negative cash flows until at least 2028, management has identified substantial doubt about Terra Innovatum’s ability to continue as a going concern.”
At the same time, many founders and experts argue that this new, more heavily regulated SPAC cycle is channeling higher-quality, more mature companies toward the public market. “After each cycle, the industry learns the lesson, and they recalibrate, and they build a healthier trajectory,” Factorial’s Huang told me. Similarly, the global advisory firm FTI Consulting wrote in March that SPACs are back “because the market standards have been reset—and the bar has risen dramatically.” Now that “the weakest sponsors have exited,” the firm claims that “a smaller, more disciplined market” remains.
Data from University of Florida finance professor Jay Ritter’s SPAC performance database, however, shows that post-SPAC returns have stayed consistently negative — both in the post-boom collapse and more recently. Companies that went public via SPAC in 2021 and 2022 lost roughly 64% of their value in their first year, while those that went public last year have dipped about 57%. Three-year returns since 2020 are also deeply negative, though it remains to be seen, of course, how recently public companies will perform in the long-term.
But while these investments sure look like a remarkably efficient way to lose over half your money, maybe there’s nothing wrong with that? After all, most venture investments lose money, and yet few dispute the role of risk-tolerant VCs in financing innovation. “As long as an investor knows what they’re buying, then what’s wrong with the SPAC market?” Higinbotham asks. In his view, SPACs simply represent another venue for high risk, high reward bets. If a startup needs capital and can’t raise it privately, going public through a SPAC may be a perfectly rational choice.
So when the latest one-year return data comes in, will those handful of outsized wins offset the inevitable losses? What about over the long-term? Is the market genuinely maturing, and should I seek to rid myself of my reflexive skepticism toward SPACs?
“No, I don’t think anything’s really changed,” Klymochko said about this latest cycle. “It’ll likely have the same result.”
