Betsy Cohen Has Launched Nine SPACs and Is Still Going
The banking veteran is known for persistence and focus in an area some fear is a fad with newcomers chasing a quick buck
Celebrity influencers like Serena Williams, Ciara and Chamath Palihapitiya have jumped on the blank-check-company boom. One of the biggest stars in this white-hot corner of Wall Street is a 79-year-old financier who doesn’t tweet or court the Reddit daytrading crowd.
What Betsy Cohen does do is deals—lots of them.
This month, Ms. Cohen brought her ninth blank-check company to market, making her one of the biggest players in special-purpose acquisition companies, or SPACs. Her latest undertaking involves a merger with Robinhood Markets Inc. competitor eToro that values the investment platform at more than $10 billion.
In total, Ms. Cohen’s SPACs have raised more than $3 billion and are taking public such companies as payment platform Payoneer Inc. and financial advisory firm Perella Weinberg Partners. Since the pandemic, Ms. Cohen, an art and architecture aficionado, does her deals from her home near Sarasota, Fla.
It is not just the number of deals that sets Ms. Cohen apart in a space now swarming with big-name financiers, athletes and pop stars.
While many of the celebrities touting SPACs are women, few run one. Of roughly 512 vehicles active in the U.S., only about 30, including Ms. Cohen’s, are led by a woman, said Benjamin Kwasnick, founder of data provider SPAC Research.
Ms. Cohen is known for persistence and focus in an area of finance that some fear is a market fad in which newcomers are chasing whatever deal looks likely to make a quick buck.
She also sniffed out the potential for SPACs well before much of Wall Street, starting one in 2015.
“My greatest pleasure is creating something out of nothing,” she said in an interview. “I’m just pursuing what I’ve always pursued, which is doing what’s unpopular until it becomes popular.”
SPACs today are clearly popular. So far this year they have raised more than $90 billion and account for about 72% of all initial public offerings, according to Dealogic.
That compares with just 22% two years ago and is a far cry from when Ms. Cohen started. In 2015, SPACs were an oddity with a checkered past; there were only about 20 that raised just shy of $4 billion, according to Dealogic.
That didn’t deter Ms. Cohen, who had just wrapped up a 50-year career spanning finance, law and real estate and in which she had started more than a dozen companies. After retiring for just eight days, she started a SPAC called FinTech Acquisition Corp. with her son, Daniel Cohen.
At first, the Cohens were looking for a way to marry their knowledge of the fintech sector with their banking experience. Ms. Cohen was the chief executive and founder in 1999 of The Bancorp Inc., a virtual bank for small and midsize businesses.
“She was a fintech pioneer all the way back in her Bancorp days,” said Kelly Galanis, managing director at Goldman Sachs, which has worked on multiple SPAC deals with Ms. Cohen.
Mr. Cohen has served as chairman of Bancorp since its inception and is a financier in his own right.
By 2015, the two thought many fintech companies, particularly ones that specialized in online payment systems, were ripe to go public via a SPAC. The companies were generally at later stages in their growth cycles. Going to market by merging with a SPAC would be faster, cheaper and potentially more lucrative than trying an initial public offering, and SPAC deals could enrich the Cohens.
This has to do with the way SPACs work. A sponsor raises money from investors, supporting a publicly listed shell company that has the sole purpose of merging with a private firm to take it public. After a SPAC does a deal, the private company gets its place in the stock market and the SPAC’s creators reap big gains.
Ms. Cohen said she was drawn to the challenge of starting a SPAC because of that mix of ambiguity and risk: Start with a pile of cash, then aim to find a private company to take public.
Mr. Cohen said the potential financial upside was also an incentive: SPAC sponsors, on average, can earn several times their original investment. Indeed, Ms. Cohen said her deals have made money, although she hasn’t specified how much.
About a year after launching, Ms. Cohen did her first SPAC deal. Her company paid $10 a share to merge with CardConnect Corp., a payment-processing company. The company was acquired about a year later by First Data Corp. for $15 a share.
Buoyed by this success, Ms. Cohen went after more deals and targeted companies that had passed their startup phase. Her rationale: If those companies, generally founded between 2005 and 2012, were still around, they had likely proven their business and were a good pick to go public.
Choosing a target is more art than science for Ms. Cohen. Her process includes seeing where a product or company fits in the financial-technology ecosystem, assessing the quality of the management team and understanding their vision for growing the company. Some targets are also the fruit of relationships Ms. Cohen developed with fintech founders during her days running the virtual bank that had about 1,600 nonbank companies on its platform.
Once a target signs on, Ms. Cohen works with her son to develop growth plans, refine the business strategy and manage other investors in the deal.
Deals unfolded at a brisk pace. In 2017, Ms. Cohen launched a SPAC that completed a merger the following year with the parent company of Intermex Wire Transfer LLC. She launched another SPAC in 2019, which merged with payments provider Paya a year later. She started three other SPACs in 2020 and launched three others in 2021.
One hallmark of Ms. Cohen’s pursuits was persistence, a quality that became especially important as the SPAC sector boomed and competition intensified. Scott Galit, chief executive of payment platform Payoneer, recalls how Ms. Cohen called him regularly for about five years to encourage him to take his company public via one of her SPACs. In December 2020, he finally agreed.
“She’s pleasantly persistent,” he said.
Ms. Cohen is also focused. Although all kinds of companies are now going public via SPAC deals, Ms. Cohen said she is largely sticking with what she knows, the fintech space, and doesn’t see that changing soon.
The risk is that SPACs become victims of their own success.
Critics of the current craze say SPACs make it too easy for companies to gain access to everyday investors and quickly become worth billions of dollars. Meanwhile, with so much new money chasing deals, analysts worry prices paid for target companies could soar regardless of the prospects for the business being bought. That could lead to stiff losses down the road.
Ms. Cohen said that as long as deals involve good companies that are growing, SPACs are viable investments. She likened them to IPOs. “There were good periods and bad periods and the same is likely to be true of SPACs,” she said.
As for her own future, Ms. Cohen thinks the fintech sector is still full of opportunities. She also hopes to bring more women into the space. To date, five of Ms. Cohen’s SPACs have had all-female boards.
Ms. Cohen, a grandmother of nine, has no current plans of retiring, again.
“You’re really only as good as your last deal,” she said.