Skin in the Game: Sponsor Risk Capital

You might think SPAC sponsors just show up and collect a payday.

But the good ones? They put real skin in the game.

Most sponsors invest millions of dollars in risk capital just to launch the IPO.

If they don’t close a deal in 2 years, they lose it all.

That’s high-stakes conviction — not just compensation.

And it’s one of the clearest ways to judge sponsor alignment with investors.

Talking Points:

• Sponsors typically cover the risk capital upfront.
• This covers legal, IPO, and administrative costs.
• If no deal is completed, that capital is lost.
• It’s one of the clearest signals of sponsor alignment with public investors.
• Also used to buy private placement warrants (not in the public trust).