Will Momentus Space Plans to Go Public via a SPAC Fail?
What is a company's plan of action to become more attractive to investors and prove its complete transparency? They attempt to go public, even if it is a three-year-old space startup that could attract financing through a usual investment round. To make it more straightforward, this is all about a space startup Momentus Space and its plan to go public through a special purpose acquisition company in 2021.
The main controversy behind Momentus' attempt to go public soon lies in the fact that they have chosen a simplified way to get to the stock market. A year ago, Virgin Galactic used the same method to become publicly traded. But now, with Momentus Space and the dubious history of its founder and CEO, the success of an IPO is strongly questioned.
Ban to Work with Momentus Space Technologies
First of all, investors may be discouraged to pour their money into a company whose chief manager has no permission to work with the company's technologies. Being a Russian expat who has not obtained political asylum or export license since 2014, Mikhail Kokorich is not allowed to work with dual-use technologies. But as a space startup working with an advanced and sophisticated product, Momentus Space develops technologies that could be used both for commercial and military aims.
Working with such technologies requires a special license as per the US export control law. But it seems like the American government doesn't find Kokorich who is engaged in court proceedings and is under investigation trustworthy. This is the case considering that the expat still keeps his connections with Russian business people, employees of central banks, and politicians. In particular, Momentus Space's co-founder - Lev Khasis - is the First Deputy Chairman of the Executive Board of Sberbank, which has been sanctioned since the Crimea annexation.
Risks for Achieving Financial Goals
With all the risk factors and no permission to use the technologies, some of which Kokorich develops himself, it is unclear if the space startup will be able to accomplish the financial goal they have in mind. Due to American legislation, this kind of deal looks risky. That is why Kokorich seems to have turned to an idea of making the company public via SPAC rather than going through all the checks traditionally. Yet, it remains to be seen whether the investors won't notice the inconsistencies in the company's management and dare to take this risk.
The one thing that appears clear for now is that the investors are questioning the decision of Mikhail Kokorich to take his startup to an IPO after only three years of existence. Could it be a result of the company facing difficulties in getting funding for their projects on the grounds of the origin of its CEO? Or maybe the reason for going public might be in an attempt to grant legal status to the head of the company showing business's complete transparency?
Legal Controversies around the Deal
No matter of the reasons underlying such a bold move, companies like Levi & Korsinsky, LLP and WeissLaw LLP are already investigating the purchase transaction that involves Momentus Space and Stable Road Acquisition Corp (SRAC). The two law firms have concerns about the eligibility of this transaction and whether it conforms to the interests of SRAC investors. This another investigation could be a barrier to the whole IPO process.
There is no knowing how the whole situation will turn out for Momentus Space, its founder, and its investors. Although, it is already clear that extra caution to learn more about Momentus Space would not hinder the investors.