SPAC Failures 2023: 21 Companies That Collapsed
- A rising number of startups that went public via special purpose acquisition companies (SPACs) are struggling to stay afloat.
- Bloomberg reports that at least 21 businesses that used SPAC mergers to go public declared bankruptcy in 2023.These failures represent approximately $46 billion in lost equity.
- Gary Broadbent, formerly with SPAC appharvest Inc., suggests the failures of these coworking, electric vehicle, and space launch ventures indicate they were not ready for the scrutiny of...
In 2023, 21 companies backed by special purpose acquisition companies (SPACs) collapsed, signaling significant financial strain and billions in lost equity.High interest rates and a volatile economic landscape have created a challenging environment for these firms, making it challenging to secure crucial funding. Our analysis reveals how companies like WeWork and Lordstown Motors failed spectacularly, highlighting that they may have been unprepared for the public market scrutiny. These failures,representing approximately $46 billion in lost equity,underscore the risks and complexities of the SPAC boom. News Directory 3’s reporting reveals that many more SPACs face a make-or-break moment in 2024.Discover what’s next for SPACs as the Federal Reserve considers possible interest rate cuts.
SPAC Bankruptcies Surge Amid High Interest Rates, economic Instability
Updated May 26, 2025
A rising number of startups that went public via special purpose acquisition companies (SPACs) are struggling to stay afloat. These companies face high interest rates and a volatile macroeconomic surroundings,making it difficult to secure new funding.
Bloomberg reports that at least 21 businesses that used SPAC mergers to go public declared bankruptcy in 2023.These failures represent approximately $46 billion in lost equity. Major bankruptcies included WeWork, Lordstown Motors, and Virgin Orbit.
Gary Broadbent, formerly with SPAC appharvest Inc., suggests the failures of these coworking, electric vehicle, and space launch ventures indicate they were not ready for the scrutiny of public markets.
WeWork’s collapse stands out as a prime example of a SPAC failure in 2023. Once valued at $9.4 billion after going public in 2021, its downfall highlights the risks associated with high interest rates following a period of near-zero rates. The current economic climate is impacting SPAC mergers.
Usha Rodrigues, a law professor at the University of Georgia, characterized the COVID-era SPAC boom as a “ticking time bomb” of corporate failures. She told Bloomberg that the impending crisis should have been evident to everyone.
Bloomberg also notes that about 140 SPACs will need immediate funding in 2024 to maintain operations. Refinancing will be challenging due to high interest rates, increasing the risk of further bankruptcies among SPAC companies.
Furthermore, Hudson Labs, an analyzer of SEC filings cited by Bloomberg, found that 44% of companies that went public through SPAC mergers and filed annual reports in 2023 included “going-concern” warnings. This indicates auditors doubt their ability to remain solvent for the year, a rate double that of non-SPACs. This highlights the financial instability of SPAC companies.
The CNBC Post-SPAC index, which tracks stocks after a SPAC merger, has plummeted 82% as its peak in february 2021.
The Federal Reserve’s recent dovish pivot, with markets anticipating multiple interest rate cuts through 2024, could offer a crucial lifeline to these struggling businesses.
What’s next
The performance of these companies in the coming months will depend heavily on interest rate adjustments and their ability to adapt to the current economic pressures. The future of SPAC mergers remains uncertain.