Youth-Focused Digital Platform FaZe Clan Inks $1 Billion SPAC Deal to Go Public

“The big opportunity is our direct relationship with the massive audience we have,” Lee Trink, CEO of FaZe Clan, said in an interview. “It’s a very large, very vibrant community that we’re deeply rooted in.”

Personalities who create content for FaZe Clan include professional athletes Kyler Murray and Ben Simmons. The singer Pitbull and several other sports and entertainment figures are among the company’s investors. As part of the SPAC deal, FaZe Clan is raising about $120 million through a private investment in public equity, or PIPE, associated with the merger.The B. Riley SPAC has about $170 million. Some or all of that money could also increase FaZe Clan’s cash proceeds from the deal. Because SPAC investors have the right to withdraw their money before a merger is completed, a SPAC’s cash pile can dwindle before a deal gets finished.

A SPAC is a shell firm that raises money and begins trading on a stock exchange to merge with a private company and take it public. The private company then replaces the SPAC in the stock market. SPAC deals have exploded in the past year, in part because they allow startups such as FaZe Clan to make business projections that aren’t allowed in traditional initial public offerings.

FaZe Clan projects this year’s expected sales of roughly $50 million will grow rapidly in the years ahead. The company is unique because it can expand without burning much cash, said Dan Shribman, the B. Riley SPAC’s CEO.Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk.

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