The relationship between SPACs and PIPEs is complementary. When a SPAC announces an acquisition target, it typically announces it is giving all the money raised in the SPAC IPO as well as what's called a PIPE (i.e., "private investment in public equity.") The PIPE serves two essential functions. First, it serves as a "price discovery" mechanism since sophisticated institutions validate the story and valuation by putting a sizable amount of capital to work. Second, it provides certainty to the private company as to the amount of committed capital that will be available at closing, no matter how many SPAC investors choose to redeem their shares for cash. For this reason, PIPEs have become a standard feature of most SPAC mergers. However, given the volume of deals coming to market, some SPACs may need to seek to close the merger without a PIPE or go "naked."