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Most people who buy stock would like to see ahead of time what kind of business they\u2019re getting into. This year, the trend is to go in blindfolded.<\/p>\n

That\u2019s the idea behind a peculiar type of company that has burst onto the tech investing scene, though it comes with a bland name: the special purpose acquisition company, or SPAC. A SPAC is a business with no hard assets or sales \u2014 but lots of cash to acquire another company or companies to be named later, after investors have already put down millions of dollars.<\/p>\n

They\u2019re also called shell companies, zombie funds or blank-check companies, because the payee on their big check is yet to be determined. They\u2019ve been around for decades, but they\u2019ve seen a surge in interest since January.<\/p>\n

Niron Stabinsky, a managing director at Credit Suisse, handled his first SPAC in 2005 back when they were rare and seen as a refuge for troubled assets.<\/p>\n

\u201cAt the time, it was absolutely a four-letter word,\u201d he said. \u201cThere was a lot of taint associated with it.\u201d<\/p>\n

Not anymore. This year has seen 101 new SPACs, according to a SPACInsider<\/a> tally through Wednesday, up from 59 in all of 2019. Bloomberg News this week declared it a \u201cfrenzy<\/a>.\u201d<\/p>\n

For a tech startup backed by venture capitalists, a blank-check company offers a chance to cash out personal wealth and raise new cash for operations. The goals are the same as in a traditional IPO, or initial public offering, but a SPAC is seen as simpler and more efficient, closer to a corporate merger.<\/p>\n

The shell-company arena is attracting some big names, by necessity: The funds seem to have an advantage when they\u2019re headed by people with connections or outsized personalities who can persuade others to part with money based partly on trust.<\/p>\n

They include Chamath Palihapitiya, an early Facebook employee and former executive who\u2019s now a venture capitalist as well as a frequent TV commentator and head of Social Capital Hedosophia, an umbrella for four<\/a> separate shell companies. He took Richard Branson\u2019s space-tourism company Virgin Galactic public via a SPAC last year<\/a>.<\/p>\n