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The Air Current launches its new coverage of the eVTOL sector with new Senior Editor Elan Head’s deep look at the landscape for funding the future of flying and just how much it has changed in the last year.

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When Embraer spinoff Eve on Dec. 21 confirmed plans to combine with Zanite Acquisition Corp., it became the sixth company in the urban air mobility space to link up with a special purpose acquisition company (SPAC). 

Rather than speak to the continued strength of SPACs, however, the deal illustrates the funding vehicle’s decline as an ample source of outside capital — even as it cements Embraer’s strategy of using partnerships to expand into new markets.

Expanded coverage: TAC Explains: What’s a SPAC?

Also known as “blank check” companies, SPACs are publicly listed shell corporations created for the purpose of identifying promising private companies and taking them public via mergers. They exploded in popularity during 2020 and into the first months of 2021, pumping more than $3 billion into the electrical vertical take-off and landing (eVTOL) space alone as a handful of startups gained multi-billion-dollar valuations and all or most of the cash they’ll need to take their vehicles through certification.

The flight-booking service Blade, and U.S.-based eVTOL developers Archer and Joby Aviation, all profited handsomely from jumping on the SPAC trend early, between December 2020 and February 2021. Germany’s Lilium, following in March, also did fairly well, securing more than half a billion dollars that will be crucial to advancing the progress of its eVTOL “Lilium Jet.”

Related: The Air Current launches expanded coverage of eVTOL and future technology

By the time U.K.-based Vertical Aerospace announced its own SPAC merger in June, however, investor enthusiasm for SPACs had fizzled — not just in the eVTOL space, but across the board. Vertical, which listed on the New York Stock Exchange in December, raised a fraction of the cash of its competitors. Eve’s deal is going through only with hefty support from Embraer, suggesting that startups who missed out on the SPAC boom shouldn’t expect a return to those heady days anytime soon, if ever.

“It’s not the buoyant time it was, and it hasn’t improved since we saw the pullback late last March, which is when it started to occur,” said Kirsten Bartok Touw, founder of AirFinance and co-president of New Vista Acquisition Corp., the SPAC led by former Boeing Chief Executive Dennis Muilenburg. “We’re still in that situation. … There’s not a lot of belief that there’s anything fundamental driving the market to make that improve.”

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As Senior Editor, Elan spearheads The Air Current’s coverage of electric vertical takeoff and landing (eVTOL) aircraft, along with a focus on emerging sustainable technologies. A commercially-rated helicopter pilot and FAA Gold Seal flight instructor, Head brings a unique vantage point to explore this critical new sector.

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