MariaDB’s potential privatization deal reflects the repercussions of 2021’s SPAC frenzy
The potential sale of MariaDB to K1 Investment Management for $37 million marks the end of an era defined by the failed experiment of SPAC mergers, which gained momentary prominence in venture circles during the recent startup boom.
Recall SPACs? Special Purpose Acquisition Companies, also known as blank-check companies, were heavily utilized in 2021 and 2022 to take numerous venture-backed startups public. However, the multitude of combinations resulting from these mergers led to lawsuits, bankruptcies, and substantial losses for shareholders.
While some companies that opted for this shortcut to the public markets were speculative ventures, others were more established businesses—MariaDB being one such example.
After securing nine figures in funding over a decade, MariaDB announced the closure of a $104 million Series D round concurrently with a merger with Angel Pond Holdings, a SPAC. Initially, MariaDB projected its equity valuation post-merger to be $973.6 million, with an enterprise value of $672.1 million. The variance in valuations was attributed to a significant fundraising event planned as part of the proposed SPAC deal.
However, when the merger was finalized, much of the SPAC capital was unaccounted for. Nearly 99% of the shares held in Angel Pond were redeemed at $10 per share, resulting in the removal of $263 million from the deal’s value. Investors who opted to sell their shares fared better than those who retained them, as MariaDB’s stock experienced a sharp decline on its first day as a public company. Presently, MariaDB’s stock trades at $0.36 per share, a slight improvement from its 52-week low of $0.16 per share on February 2.
Despite a modest rally, MariaDB has fallen short of investors’ expectations. In its SPAC presentation, the company forecasted its Annual Recurring Revenue (ARR) to reach $53 million in FY 2022 and $72 million in FY 2023, alongside revenue projections of $47 million in FY 2022 and $64 million in FY 2023.
