The SPAC market has been on a comeback tour over the past year. But there’s likely to be a temporary slowdown if the market continues to have concerns over AI’s impact on the software sector, as well as geopolitical tensions, including the war with Iran.
“Issuance has been high, but sponsors are taking a beat just to see what happens in the market,” says Kristi Marvin, the founder and CEO of SpacInsider, which tracks SPACs. She notes that so far this year there have been 58 SPAC IPOs, in contrast to 144 for all of 2025. “People had high expectations for the year,” she says.
In addition to the headwinds in the market, SPAC issuance tends to be cyclical. She expects a slight uptick this year—estimating that about 160 will come to market in 2026.
SPACs are just empty shells that hold Treasuries or other cash-like instruments, until they merge with a target company in what’s known as a de-SPAC. That may make them an attractive place for investors to park their cash right now due to the redemption feature, she says. But how much issuance happens will still depend on market conditions. “I think the better indicator will be Q2,” she says.
“Coming into this year there was a ton of new insurance because I think everybody in the capital markets was expecting this to be a big year for deal making,” she says.
Even though SPACs are insulated to some degree, “market volatility is never really great for capital markets, particularly when you're trying to go public.”
She points out that SPACs only have 24 months to complete a deal, which means the clock is ticking as soon as the IPO is completed. “Sponsors are incredibly cognizant of how much time they have, so they want to, they want to pick their spot. And they're going to wait until the time is right.”
She explains that “They know that they're going to have to spend six months researching companies and doing due diligence if they find one they like.” Then they're trying to game out when is the best time to announce the deal. “What the market going to look like six months from now, nine months from now? And then what is the market going to look like when they close?”
“Time is so precious when you're doing a SPAC,” she says. The last thing a sponsor wants to do is ask for an extension to do a deal “because every time you go to a shareholder vote to extend, you risk redemptions.”
What happened to the crypto treasury deals, which were last year’s darling, is instructive. After the crypto market crashed in October, seven SPAC deals in this strategy have "just been sitting there,” she says. Either the crypto market improves enough for these deals to move forward, or they will pass their termination deadline, and the SPACs will be liquidated.
As for where investors are likely to go next, she suggests that renewable energy might get an uptick in interest if oil prices remain high.
Right now, quantum computing deals are hot, but she says, ”I don't think we're going to see too many more of them, just simply because there aren't that many quantum companies.”
For now, sponsors appear willing to wait, even as the clock on their vehicles continues to run.
