Ginkgo has grown to 500-plus employees, and its
Foundry, a highly automated lab/factory, now occupies 217,000 bright, glassy square feet in Bostons Seaport District. On a day in late June, specialized robots seem to outnumber humans, though, pipetting precise amounts of reagents, flipping 96-well plates, stirring flasks of fermenting microbes. Thanks to its investments in
state-of-the-art automation and proprietary processes, Ginkgo is able to design, build, test, and optimize new microbes and
commercial fermentation processes far faster than nearly any in-house R&D lab could. Its taken us 13 years basically to build our technology and figure out the business model, says Kelly,
40, who serves as Ginkgos CEO.
Now, as the company pursues a SPAC, the question is, is Ginkgos
eye-popping valuation emblematic of an overexuberant SPAC market, or the result of a company finding the right tool to communicate and capitalize on a truly transformative business idea? Or both? Over several
weeks in late June and early July, Kelly and the rest of Ginkgos executive team took Fortune through the ins and outs of taking your company public via SPAC, from due diligence, through forward-looking statements and valuationsto
dinosaurs.
The ins and outs of SPACs
Going public via SPAC is essentially a newfangled play on a reverse merger. A SPAC sponsor forms a shell company for the sole
purpose of acquiring a private, operating business and takes it public on a major stock exchange. The sponsor contributes capital in the form of a private placement, typically 7% to 7.5% of the planned proceeds from the IPO. Then the SPAC looks for
a target business to merge with, to create a new, publicly traded operating company with a fresh ticker symbol. (When its SPAC merger is completed, Ginkgo Bioworks will trade on the NYSE under the symbol DNA, which formerly
belonged to Genentech.)
Compared with traditional IPOs, SPACs (technically, de-SPAC
mergers) have fewer formal requirements and are widely considered to be faster and less costly than a traditional IPO underwritten by an investment bank. And they have become wildly popular with investors. In 2020, more than 248 SPACs were listed on
the Nasdaq or the NYSE, raising a record $83.4 billionsix times the amount raised in 2018 and nearly equal to the amount raised by traditional IPOs. So far, in 2021, 330 SPACs have raised nearly $105 billion in funding, according to SPAC
Research. The surge in SPACs has created no small amount of skepticism, inevitable talk of a bubbleand the attention of the SEC.
When Ginkgo Bioworks founders first started to think seriously about going public, in the fourth quarter last year, they had assumed
they would do the traditional crossover [funding round] to IPO route, says Anna Marie Wagner, Ginkgos senior VP of corporate development, a Bain Capital veteran who joined Ginkgo in 2019 and also served as interim CFO. In
late 2020, there was sort of a feeling that SPACs werent something that good companies did. But after seeing some really high-quality companies go the SPAC route, Wagner says, we started taking that option more
seriously and meeting with a number of SPAC sponsors in mid-February.
The promise of an
accelerated timeline appealed to Ginkgo Bioworks CEO Jason Kelly, 40. He wanted to seize the post-COVID moment. Biology has been in everyones face for a year and half, he says. And he didnt want to have his whole management
team distracted by putting in 24-hour IPO days for six months or more. In an IPO, your team is focused on that right through to the IPO day, he says. With a SPAC, you have a much
shorter period where the senior team is focused [on going public]. Its not frenetic for six months; its frenetic for three months. Once a SPAC agreement is signed, management can largely get back to their regular business.