Raising money for an unknown purpose isn't exactly an easy sell...
As I explained yesterday, 19th-century industry titan Henry Villard was only able to pull it off because he spent years establishing a reputation as a rainmaker... and people were lining up to invest alongside him.
That's how Villard established the first of what would now be known as a special purpose acquisition company ("SPAC").
Most sponsors today need to entice investors with deal-sweeteners like warrants and stock rights – goodies that allow investors to buy discounted shares in the future, should the stock appreciate.
If the sponsors don't find a target within two years, they return the investors' cash, plus interest. So for those early investors, it's a no-risk venture.