EarlyBirdCapital
Pulled back from SPACs in 2023
Fees Earned
$300.0M
SPACs Underwritten
55
Bankrupt SPACs
4
Bankruptcy Rate
7.3%
Overview
EarlyBirdCapital was the specialist SPAC underwriter that handled more blank-check IPOs per capita than any other firm. Despite its smaller size, the boutique bank earned an estimated $300 million from SPAC fees. EarlyBirdCapital underwrote many of the smallest and most speculative SPACs, which had the highest failure rates. Their client SPACs had a disproportionately high bankruptcy rate, making them the poster child for how SPAC underwriting incentives were misaligned with investor outcomes.
Average Client Return
Average return for investors who held SPAC-merged companies underwritten by EarlyBirdCapital. The bank collected its fees at IPO regardless of subsequent performance.
Notable Deals
The Fee Structure Problem
SPAC underwriters like EarlyBirdCapital typically earned 2% of the IPO proceeds upfront, with an additional 3.5% deferred fee paid at deal completion. On 55 SPAC IPOs, this generated approximately $300.0M in fees.
Crucially, these fees were earned regardless of whether the SPAC found a good target or whether investors made money. The deferred fee was paid from the trust at merger completion — meaning the bank had every incentive to push mergers through, even with subpar targets.