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The TechCrunch Exchange: What’s an IPO to a SPAC?

The TechCrunch Exchange: What’s an IPO to a SPAC?
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The TechCrunch Exchange newsletter launched this morning. Starting next week, only a partial version will hit the site, so sign up to get the full issue.

Welcome to The TechCrunch Exchange! I’m incredibly excited that this newsletter is finally in your hands. There’s so much to chat about, dissect and grok. We’re going to be very busy.

What will we do each Saturday? First, we’ll expand on the themes that The Exchange covers for Extra Crunch on weekdays. We’ll also run through key startup-related news from the public and private markets. Our goal is to stay firmly abreast of the biggest stories in the realms of startups and money.

Another way we’ll use this newsletter is to provide a space to share interviews, details and stories that didn’t fit neatly into a piece, but really deserve their own time all the same. If you like what TechCrunch reports and want more, this missive will have it.

And finally, we’ll take a little time at the end for something fun. We’re talking about money on a day off, so we deserve some joy to go along with the math.

Sound good? Let’s jump in.

Coinbase is expected to go public in 2020 or 2021, with most expecting its filing early next year. Though given how hot the IPO market is today (more here), perhaps we’ll see the document sooner rather than later.

Regardless of when, the Coinbase debut will be a big deal, providing a booster shot of cash to investors who put over $500 million into the startup and crypto as a thesis. For you and I, the IPO will also mean an S-1 filing chock full of notes about how the crypto space looks for a mature trading platform.

But there’s another company in Coinbase’s space that doesn’t intend to go public: Binance. The Exchange caught up with its voluble founder, CZ, on Friday to chat about the possible Coinbase IPO. According to the CEO, a Coinbase debut would be “very good for the [crypto] industry,” which makes sense; if Coinbase can go public it would lend credibility to its market in a way that few other business transactions can.

But Binance, which funded itself partially through a 2017 ICO, plans on staying private. CZ says because his company has largely not raised capital from traditional sources, it doesn’t have to answer to investors. This means it isn’t pressured to go public or make money folks happy in other ways.

Like charging more for its products, CZ posited. Companies that raise extensive external capital have an “ethos” to maximize their rates so that they can “maximize shareholder value,” he said. In CZ’s view, Binance doesn’t have to do that so long as it keeps making money and doesn’t run low on cash.

Private commerce without exit events feels strange because it locks up shareholder value — external investors aside. Still, the crypto world is providing us with a live business case of two competing philosophies regarding how to run a business; one following a more traditional venture approach and one building off the back of a newer model.

Which will come out on top? It’s not clear, but the eventual Coinbase S-1 is going to be big in helping us better understand one half of the question.

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