BuzzFeed could have raised hundreds of millions of dollars in a SPAC. Instead it got just over $16 million thanks to redemptions. Here’s how they work.

On Thursday, shareholders of 890 5th Avenue Partners, the special purpose acquisition company (SPAC) intending to take BuzzFeed public, overwhelmingly approved the deal by a margin of nearly 60 to 1.

It was a momentous step for the 15-year-old New York company, which has long been the poster child for digital media. BuzzFeed was a darling of the new class of millennial-geared media companies in the decade after its launch in 2006, with CEO Jonah Peretti pushing to expand the BuzzFeed name beyond its popular online quizzes with a strong newsroom (that recently won a Pulitzer Prize) and a motion picture division, along with a swirl of other ambitions. Then, like many other digital media companies, BuzzFeed suffered from a mix of waning investor interest, growing advertising competition from social media platforms, and faltering growth—driving its valuation down from its 2016 high of $1.7 billion. BuzzFeed now expects its valuation to stand at $1.5 billion after the SPAC deal closes. 

Peretti has framed BuzzFeed’s upcoming entrance into the U.S. public markets as the beginning of a new era, one where the company will be actively pursuing acquisitions like that of Complex Networks, work with content creators, and expand its reach into areas like travel and fashion.

“Soon we’ll have a public stock and more resources to invest in growth,” Peretti wrote in June. “The world is opening up again as the pandemic comes to an end. And with over half a billion in projected revenue this year, we finally have the scale to influence how the larger media industry works and help shape a better model for the future.”

The markets aren’t so sure about its prospects, though. Investors have withdrawn about 94% of the $287.5 million of capital that had been invested in BuzzFeed’s SPAC partner, according to a Dec. 2 securities filing. It’s a stunning pullback that leaves BuzzFeed now expecting to raise just $16.2 million in SPAC proceeds as part of its upcoming public market debut on Monday, and signals that investors have questions about the company’s growth trajectory.

“Normally high redemptions are a pretty big sign that it’s a bad deal,” New York University law professor Michael Ohlrogge, who studies SPACs, tells Fortune.

BuzzFeed does not expect the 94% of withdrawals to affect its acquisition strategy, a spokesperson for the company told Fortune, adding that it has enough cash to operate and grow its business. BuzzFeed did have $145 million of cash and cash equivalents on its balance sheet at the end of the third quarter, and, on Friday, it closed a $150 million convertible note financing. 

SPACs like 890 5th Avenue are essentially structured at launch as blank-check companies.

Usually formed by a group of sponsors that includes some mix of financiers, but may involve celebrities, professional athletes, or former politicians as well, a SPAC raises money through an initial public offering of its own to go out and target a private company that it then acquires—a process that the SPAC usually has two years to complete. But before the deal is completed and the private company takes over the SPAC’s public listing, investors have a chance to redeem their shares and pull their money out of the deal if they want to.

In the first part of the year, as the market around blank-check companies exploded, redemptions in SPACs stood at around 25%, according to The Wall Street Journal, which cited data from the company SPAC Research. Withdrawal numbers have jumped as of late, though, as SPACs have fallen out of vogue. The average SPAC has lost about 60% of the money it raised before its deal has been completed since the end of July, The Journal reported. In BuzzFeed’s case, with withdrawals of about 94%, Ohlrogge says it’s the likely result of investors wanting out of the deal but not finding the interest in the market to resell them. So, they redeemed.

Shares of 890 5th Avenue Partners slid by as much as 14% in trading Friday before bouncing back. The stock ended the day down 2.93% at $9.62. 

For Ohlrogge, though, even the debt raise of $150 million is a sign that investors are not ready to jump aboard BuzzFeed’s ship in the public markets.

Typically private investments in public equities, or PIPEs, entail big-name investors buying up shares of a SPAC so that they can get in early on the target company. But in the case of BuzzFeed’s, the investors bought convertible debt from the company, meaning they now have a sure-fire way of recouping their investments plus interest, if BuzzFeed fails to live up to expectations. In the few cases where those structures have been in place, shares of the newly-public companies have struggled, according to Ohlrogge.

“Every single deal that I’m aware of that has had these convertible notes does quite poorly post merger,” Ohlrogge says. “And that’s not a surprise.”