Start-ups are flooding the automotive sector, and it has never been easier for retail investors—members of the public with cash to spare—to grab a slice of the action. Corporate investors including automakers, large Tier 1 suppliers and Internet giants are also putting hundreds of millions of dollars behind these new entrants in a bid to get ahead of the competition.

Many of these start-ups will have gone public after years of grafting in the field of venture capital (VC), raising progressively larger rounds of funding and making the most of the networking opportunities afforded by an established VC firm. But the ease with which some start-ups have made an initial public offering (IPO) has raised eyebrows within the analyst community, and attentions are turning to the use of special purpose acquisition companies (SPACs).

The reverse merger

Special purpose…