BuzzFeed investors pull funds as company plans to go public via SPAC: report
BuzzFeed, the digital media company known for a curious mix of quizzes, listicles and hard hitting news stories, isn’t expected to raise as much cash via its public listing as it once advertised.
Citing anonymous sources, The Wall Street Journal reported Thursday that investors in the blank-check company that BuzzFeed is combining with in order to go public, are pulling out the bulk of their money.
BuzzFeed, which is set to begin trading in the coming days, will likely raise “a fraction” of the $287.5 million it initially expected, The Journal said.
In June, BuzzFeed ‘s co-founder and CEO Jonah Peretti announced plans for the company to go public through a merger with 5th Avenue Partners, a special-purpose acquisition company, or SPAC. These blank-check companies raise money and list on the stock exchange with the intent of merging with a private company to take it public.
But investors pulling out the bulk of their money, and according to The Journal, the reduced cash could put pressure on BuzzFeed’s balance sheet. BuzzFeed has also secured $150 million in convertible note financing.
BuzzFeed did not return requests for comment.
The digital media giant has said that the SPAC deal would help it bring in new talent, pursue acquisitions and lift sales by 25 percent annually through 2024. BuzzFeed’s SPAC deal is also financing this summer’s acquisition of lifestyle publisher Complex Networks. That acquisition comes on the heels of BuzzFeed’s deal to buy HuffPost earlier this year.
The pullback in financing comes as the once-hot SPAC market has cooled, in part because of new scrutiny from the Securities and Exchange Commission on overinflated revenue projections made by some startups that are merging with SPACs.
Other companies have pulled the plug on their SPAC plans amid declining stock prices for firms that go public this way. In recent months, BuzzFeed rival Vice Media ended talks to go public via a SPAC, in part because it didn’t have strong enough financials to make the deal work, sources told The Post at the time.
BuzzFeed said last month that its revenue totaled $90.1 million in the third quarter, up 20 percent over the year-ago quarter, thanks to a 39 percent jump in advertising sales. The company said it lost $3.6 million for the quarter