SoundHound Propelled by PIPE Deal

Artificial intelligence innovator SoundHound, Inc. will be going public next quarter in a SPAC deal that values the company at $2.1 billion. Expected to close in the first quarter of 2022, this PIPE (private investment in public equity) deal is led by Oracle, Koch Industries, and MKaNN Ventures. The backing of these prominent private equity firms provides “strong validation of SoundHounds technology and business,” according to the press release

AI has received increasing attention from investors as the industry is predicted to grow to $554 billion by 2024. SoundHound is a pioneer in the space, having been founded back in 2005 — well before many of the other AI firms operating today. It has invested heavily in making voice computing more natural and easily incorporated into consumers’ everyday lives. 

SoundHound works with brands such as Mercedes-Benz, Hyundai, Pandora, and Mastercard. Harnessing “breakthrough natural language technology and Collective AI approach,” the company permits its clients to voice-enable their products so customers can ask to turn up the air conditioning, order food online, find directions, and other routine tasks. This transaction with Archimedes Tech SPAC Partners Co. will provide the company with $244 million. 

SPACs have been in the spotlight throughout 2021, with well known names from President Donald Trump to Channing Tatum making headlines with deals in November alone. But SPACs are far from a new financial innovation: they date back to 1993 when David Nussbaum and lawyer David Miller created the first SPAC to enable private companies to access a broader pool of investors. 

While these investment vehicles remained relatively obscure for decades, they finally boomed during the pandemic as a confluence of factors propelled the current surge: when the Federal Reserve slashed interest rates at the start of the covid-19 shutdowns, it flooded the markets with cash and incentivized investors to pour funds into SPACs in search of returns. And just as these funds were flowing into public markets, the number of public companies had dropped significantly over the preceding decades, declining from 8000 to 4000.  

In turn, SPACs used the hedge fund and other investors’ funds by identifying private companies ripe for public markets. The early successes of Virgin Galactic and  DraftKings fueled SPACs’ popularity. And now the private equity money flowing in PIPE deals such as this has further propelled the SPAC market to new heights. 

SoundHound’s legal advisor is Ellenoff Grossman & Schole, and financial advisor Guggenheim Securities. The SPAC is advised by Loeb & Loeb, and financial advisor EarlyBirdCapital, Inc. According to the press release, SoundHound, fueled by this transaction, “is poised to disrupt and revolutionize human-machine interaction via voice.” 

Logan Beirne is a lawyer, entrepreneur, and academic. He serves as CEO of Matterhorn Transactions, Inc., an AI-powered tech company that provides M&A analytics to thousands of law firms across the US, UK, and Canada. In addition to its public deal systems, Matterhorn also customizes and hosts databases of private deal-related documents for law firms. Using proprietary software and analytic expertise, Matterhorn’s databases provide unprecedented insight into proprietary deal-document databases, and significantly enhance precedent management and analysis. 

Logan has served on the board of directors of 5 organizations and the board of governors of a municipality. He also teaches Financial Markets, Corporate Law, and Business Ethics at Yale Law School. His bestselling book, Blood of Tyrants: George Washington, the Forging of the Presidency, won the 2014 Colby Award and the Lincoln Medal.  Beirne and his writings have been featured by The New York Times, The Wall Street Journal, USA Today, The Washington Times, Reuters, National Review, and other media outlets.

Previously, Logan was an attorney at Sullivan & Cromwell LLP and worked in private equity at GE Capital. He received his BS from Fairfield University, was a Fulbright Scholar at Queen’s University, and received his JD from Yale Law School.