What’s been on our mind: In the wake of home insurtech Hippo’s SPAC merger earlier this week, we’re digging into what the future holds for companies using SPACs to go public.

Hippo joins a wealth of fintechs that have opted to take the same path to a public listing: Fintech SoFi and payments firm Payoneer both completed SPAC mergers in June, while insurtech Clover made its public debut in January.

What’s been happening in the SPAC space: In H1 2021, 21 fintech SPAC mergers were announced—in just six months surpassing the record-breaking number of SPAC announcements made during the entirety of 2020, per FT Partners.

This trend shows no sign of slowing down: Over 400 SPACs still need to execute a deal, with fintechs likely to remain a popular target for such mergers—suggesting that the next few years on the fintech SPAC front will stay very, very busy. In fact, SPACs could drive almost $1 trillion in deals in the next two years, Goldman Sachs forecast in April.

What does this mean for the industry? Although SPACs remain an attractive way for fintechs to go public, competition could make investors more cautious.

The SPAC route has appealed to fintechs because it's expeditious: It enables them to circumvent the requirement to provide regulators with lengthy and rigorous financial disclosures. While the trend of SPAC raises doesn’t seem to be slowing down, a surplus of available SPACs can lead to SPAC-offs, in which SPAC companies compete for acquisition targets. SPACs’ three-year deal execution deadline increases the likelihood of future SPAC-offs, as 260 companies will face merger deadlines during Q1 2023, per the Wall Street Journal.

Investors are now showing signs of greater cautiousness about SPACs: Hippo reportedly lost 83% of the capital raised by its SPAC, returning $192 million to its investors, which means Hippo will receive less money than it expected—though it still pulled in $550 million from private investors. This begs the question of whether some public debuts will fail because of a proliferation of SPACs and scarcity of enough lucrative targets to go around.