Bonnie Young
Shift's Race to IPO Was a Slow Drive: Neither Speedy Nor Cheap
Updated: Oct 23, 2020

Shift’s recent public listing via the Insurance Acquisition Corp SPAC has sputtered relatively under the radar. I have not seen much written about this topic since shares began trading on October 14, 2020. Since then, the stock has traded fairly steadily between $10 and $11 per share.
Shift went public through a SPAC on October 14. A Special Purpose Acquisition Company is a blank-check company that raises money from institutional investors with the goal of acquiring a Company then taking it public. Companies choose to use a SPAC to go public because it requires less disclosure and is quicker than a traditional IPO.
Reading through Carvana, Vroom, and Shift’s investor presentations, I always get a strong sense of déjà vu between the 3 companies’ filings. The companies do in fact recycle many of the same terms like “massive, fragmented market”, “ripe for disruption”, “proprietary pricing algorithm”, “150+ point inspection”, and “in-house reconditioning”. Of course, they are all trying to say the same thing given all 3 company business models are almost the same, but I think everyone could benefit from a little wordsmithing now and again.
What We Know About the Transaction
Shift began trading on the Nasdaq as “SFT” on October 14, 2020. Shift warrants are trading under the ticker “SFTTW”.
The shell company is called Insurance Acquisition Corp. and is sponsored by Cohen & Co., an Asset Management firm in Philadelphia that has built out several SPACs before.
Insurance Acquisition Corp. initially raised $154 million in its blank check company IPO.
An additional $185 million was raised in a private purchase (PIPE) from Fidelity Management and ArrowMark Partners. These investors bought in at $10 per share.
Lithia Motors, an Oregon based automotive retailer, is the largest strategic investor in the Company and owns about 17% of the pro forma entity.
What We Learned About Shift’s Operations
Shift is only in 5 markets today with 8% population coverage. Contrast that with Carvana’s 261 markets and 67% population coverage.
Shift arranges for buyers to test drive the cars, a service neither Carvana nor Vroom offers today.
Shift's average selling price is only $16,046 vs Carvana’s ~$30,000 and Vroom's ~$25,000.
75% of Shift cars are 4 years or older. Most of Carvana and Vroom's cars are less than 3 years old.
85%+ of Shift’s vehicles are sourced from consumers compared to Carvana’s ~50% and Vroom’s 36%.
Even though all 3 companies were founded in 2013/2014, Carvana is miles ahead of Vroom and Shift in every measurable metric of scale. To put this metaphorically: Carvana is an 18-wheeler truck, Vroom is an SUV, and Shift is a Mini Cooper. See below for my comparison of scale:
3 Mirror Images of Vastly Different Scale

Despite using a lot of the same buzz words, Shift is not actually claiming to compete with Carvana or Vroom on price or markets. The market is big enough to support all 3 companies and more. The table below is from Shift’s investor presentation and shows that Shift is fairly differentiated in the massively underpenetrated eCommerce used car landscape.
Shift Sells Older Cars at a Lower Price Point

Was Using a SPAC In Fact Cheaper and Faster?
Cost. This transaction was not cheap for Shift. Shift paid $36 million in transaction fees for the $340 million it raised in this transaction. Compare that with $20 million in underwriting fees/expenses Carvana paid for its $225 million IPO and $37 million Vroom paid for its $468 million IPO. Shift’s fees seem pretty high relative to the transaction size, especially for a SPAC, which is supposed to be cheaper.
Speed. Most companies take about 3 months from the time of an initial SEC S-1 filing to initial trading date. Shift’s merger was approved on June 29, but shares didn’t begin trading until October 14. That is a 107 day window. I would conclude that this transaction was no more expedited than your typical IPO.
About the Author
Bonnie Young runs the Amplified blog. She shares her insights on market trends from US to Asia and interviews founders shaking up the tech scene. If you want new articles directly in your inbox, subscribe to the Amplified newsletter. Bonnie is currently looking for a growth equity or VC role in the Bay Area. Please reach out to her at bonnieyoung@berkeley.edu