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Revelations from the Trump SPAC’s new registration statement

May 17, 2022, 12:04 PM UTC

I am now on Truth Social. 

I figured I’d give it a whirl. Trump Media & Technology Group’s registration statement for its forthcoming SPAC merger dropped with the SEC yesterday morning, and it seemed like a good time to see what the hell is going on with this new Trumpian social platform (which, by the way, might have to be rebranded, but we’ll get to that).

My take after an initial 10 minutes: It’s basically Twitter, if Twitter immediately recommended you follow Donald Trump and Dinesh D’Souza (and maybe a foodie page). You may promptly get followed by “LiberalTears,” a MAGA bracelet shop, and a bunch of Ron DeSantis fan groups after setting up your profile.

Even with the new proxy statement, we still don’t have a lot of hard data here, nor a developed business plan. What we do know is that Trump’s media company has approximately 40 full-time employees right now, and he could be paid to post on Truth Social, which would have the rights to those posts for six hours, with some caveats. You have to wonder whether the former president will take Elon Musk up on his offer to return to Twitter, once Musk takes it over.

Either way, here’s my list of interesting tidbits we learned from the new documents:

  • The whole SPAC deal remains under multiple investigations, and the social media platform has already run into a little bit of trouble regarding its source code. The SEC requested documents and information regarding meetings, communication, agreements and payments to advisors, etc. FINRA, the Financial Industry Regulatory Authority, is also reviewing trading that preceded the public announcement of the SPAC merger. None of that necessarily means there was misbehavior. There does seem to have been a hiccup in the source code (the open source code from Mastodon TMTG used to develop the platform), because Truth Social allegedly didn’t make that code public to others. It is public now, for what it’s worth. 
  • The exact spelling of the social network’s name is unclear and might change anyway. The social media network is referred to as both “Truth Social” and “TruthSocial” in the proxy, so it’s uncertain which is the formal name of the network (The website seems to indicate there’s supposed to be a space, so I’m going with that.) But it might not matter anyway, because TMTG might have to drop both. Its trademark application for “TRUTH SOCIAL” is still pending, according to the SEC filing, and a company has contested it. “We may be forced to change our name or reach an accommodation,” the filing reads.
  • There’s a list of other entities dating back to the 80s that are associated with or had licensing agreements with Trump that have gone bankrupt or failed. Some of those include the Trump Taj Mahal, the Trump Plaza, the Trump Castle, Trump Shuttle, Trump Vodka, Trump Mortgage, GoTrump.com, and Trump Steaks.
  • The media is apparently very misleading and you shouldn’t listen to it (Why are you reading this?!) A note in the filing reminds investors that they should review the info in the proxy statement, as there will likely be media coverage that “incorrectly reports on statements made by Digital World or TMTG’s officers or employees, or that is misleading.” Got that? Great. Let’s continue.
  • TMTG’s initial plans are vague. Here’s the strategy: 1) Grow Truth Social to ultimately attract more platform partners and advertisers. 2) Create a video streaming platform under assumption “that there is a need for quality programming that does not lecture its viewers or only presents one ‘acceptable’ approach on a topic.” 3) Acquire other businesses or technologies to better offer its products to eventual customers. 4) Launch more products, such as to provide services to businesses like gun manufacturers or oil and gas exploration companies, that “are facing discrimination on the basis of political ideology.”
  • TMTG still doesn’t have a fully developed business plan or leadership team, and it doesn’t think it will be making revenue until at least 2023. This shouldn’t be too surprising, given the company also seemed to decide its own purported post-deal valuation, but there still isn’t any developed business plan. The filing really doesn’t establish how the company will achieve the growth it’s seeking, and it never mentions how many active users are using its social media network today—part of the first growth stage of the plan. I’m going to take a wild guess and say there are somewhere around 2.79 million users, as that is the number of people following Donald Trump. Of course, I could be wrong here. But I think it’s fair to say many people are on there for him. Whatever the case, there aren’t enough users yet. “According to a survey published in The New York Post, only 60% of Republicans would use such a platform. In order to be successful, TMTG will need millions of those people to register and regularly use TMTG’s platform,” the filing reads.
  • Elon Musk’s acquisition of Twitter could get in the way. Looks like all Elon Musk’s talk on free speech might cause a problem for Truth Social. The filing says that if Twitter demonstrates a “renewed commitment to free speech principles” it could heighten competition for users who prioritize that.
  • Trump could get distracted by a laundry list of lawsuits or federal investigations. Here is a summary that “does not purport to be an exhaustive list:” 
    – A congressional committee investigation of President Trump’s role, if any, in violence at the United States Capitol on January 6, 2021.
    – Two groups of U.S. Capitol Police officers, in two separate lawsuits, are suing President Trump for allegedly inciting riots on Jan. 6. 
    – U.S. Representatives Bennie Thompson and Eric Swalwell have sued President Trump for allegedly inciting riots at the Capitol. Representative Swalwell has filed claims for emotional distress.
    – The NAACP Legal Defense & Educational Fund filed a lawsuit against President Trump alleging that he violated the Voting Rights Act of 1965 and the Enforcement Act of 1871 by exerting pressure on state and local officials not to count or certify votes
    – The Fulton County Georgia District Attorney’s office launched a criminal probe into President Trump’s alleged interference in the presidential election. 
    – A Pennsylvania poll worker sued President Trump for damages caused by alleged defamatory statements made by President Trump following the 2020 election. 
    – Eric Coomer, a former employee of Dominion Voting Systems, sued President Trump for alleged defamatory statements made by President Trump during the 2020 election.
    – The U.S. House of Representatives Committee on Oversight and Reform is investigating President Trump’s alleged destruction and removal of classified documents and White House records, as well as potential inaccurate financial statements filed by the Trump Organization in relation to the Trump Hotel in Washington, D.C. 
    – The New York County (Manhattan) District Attorney, the New York Attorney General, and the Westchester County District Attorney are separately determining if the Trump Organization made false valuations of property to avoid tax liability and for other financial benefits. 
    – A New York state court judge held President Trump in civil contempt for failing to comply with a subpoena for documents related to the New York Attorney General’s investigation of the Trump Organization. 
    – President Trump, along with his three eldest children (including Donald Trump, Jr., a TMTG board Member), are defendants in a class action lawsuit accusing them and The Trump Corporation of defrauding investors in exchange for secret payments from multiple companies. 
    – The Trump Organization recently paid $750,000 to settle a lawsuit filed by the District of Columbia accusing the organization of misusing nonprofit funds from the 58th Presidential Inaugural Committee.
    – A group of six protesters filed a lawsuit against President Trump alleging that President Trump and his co-defendants are liable for assault and battery after the protesters were attacked by Trump Tower security guards. 
    – President Trump is the defendant in a class action lawsuit filed by tenants of buildings once owned by the Trump family accusing them of fraud and racketeering. 
    – President Trump is the defendant in a lawsuit filed by his former personal attorney, Michael Cohen, seeking damages for alleged retaliatory imprisonment.
    – The House Ways and Means Committee remains engaged in a yearslong attempt to obtain President Trump’s tax returns from the Treasury Department as part of an investigation into the IRS’s oversight of presidential tax returns.
    – President Trump is the defendant in a defamation lawsuit filed against him by E. Jean Carroll who claims that President Trump defamed her when he denied her allegations of sexual assault against him.
    – Lawsuits in which Trump is plaintiff: President Trump sued NY AG Letitia James to stop the investigation into the Trump Organization. President Trump sued New York City over its decision to cancel the Trump Organization’s contract to operate a golf course in the Bronx. President Trump sued Mary Trump and the New York Times for their disclosure and publication of his tax information. President Trump sued Twitter, for allegedly violating his First Amendment rights by banning him from its social media platform (this lawsuit was dismissed in May 2022).

There’s few business metrics or numbers to point to here. People who scoop up this stock, should the company go public, will largely be taking a bet on Trump, not the historical performance of Truth Social (or whatever its name will be). 

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Imply Data, a Burlingame, Calif.-based database provider for analytics applications, raised $100 million in Series D funding led by Thoma Bravo and was joined by investors including OMERS Growth Equity, Bessemer Venture Funds, Andreessen Horowitz, and Khosla Ventures.

- Optibus, a Tel Aviv-based software platform for public transportation planning and operations, raised $100 million in Series D funding from investors including Insight Partners, Bessemer Venture Partners, Verizon Ventures, Pitango First & Pitango Growth, Tencent, SOMV Momentum, and others.

- Elwood Technologies, a London-based digital asset platform for institutions, raised $70 million in Series A funding. Dawn Capital and Goldman Sachs co-led the round and were joined by investors including Barclays, BlockFi Ventures, Chimera Ventures, CommerzVentures, Digital Currency Group, Flow Traders, and Galaxy Digital Ventures.

- A.Team, a New York-based members-only network for creating workplace teams, raised $55 million in Series A funding. Tiger Global Management, Insight Partners, and Spruce Capital Partners co-led the round and were joined by investors including Jay-Z’s Rocnation, Adam Grant, and others.

- Carma, a Sydney, Australia-based used car platform, raised $52 million in Series A funding led by General Catalyst Partners and Tiger Global.

- Whoz, a Paris-based staffing, talent, and project portfolio management solutions provider, raised €25 million ($26.05 million) in funding led by PSG Equity.

- Keelvar, a Cork, Ireland-based sourcing and automation solutions provider, raised $24 million in Series B funding led by 83North and was joined by investors including Elephant, Mosaic, Paua, and Celonis co-founder and co-CEO Bastian Nomichacher.

- Metatheory, a remote-based Web3 entertainment company, raised $24 million in Series A funding led by Andreessen Horowitz and was joined by investors including Pantera Capital, FTX Ventures, Breyer Capital, Merit Circle, Recharge Thematic Ventures, Dragonfly Capital Partners, Daedalus, Sfermion, and Global Coin Research

- Akuity, a Sunnyvale, Calif.-based Kubernetes-based application delivery software provider, raised $20 million in Series A funding led by Lead Edge Capital and Decibel Partners

- US Mobile, a New York-based prepaid phone carrier, raised $19.5 million in Series A2 funding led by Volition Capital and was joined by investors including Stonks.com founder Ali Moiz, SquareTrade founder and former CEO Ahmed Kaishgi, Avenue Growth Partners co-founder Brian Goldsmith, Tiny Partner co-founder and general partner Andrew Wilkinson and Jeremy Giffon, and James Beshara.

- Perennial, a Boulder, Colo.-based soil carbon measurement, reporting, and verification platform for soil-based carbon removal, raised $18 million in funding. Temasek and Bloomberg co-led the round and were joined by investors including SineWave Ventures and the Microsoft Climate Innovation Fund.

- Glisser, a London and New York-based hybrid meetings and events platform, raised $4.9 million in funding led by Downing Ventures and was joined by Gresham House.

- Anja Health, a Los Angeles-based stem cell treatment startup, raised $4.5 million in seed funding led by Seven Seven Six founder Alexis Ohanian and was joined by investors including Harvest Ventures, Crista Galli Ventures, and others. 

PRIVATE EQUITY

- Carlyle agreed to acquire ManTech International Corporation, a Herndon, Va.-based  technologies and solutions provider for national security programs, for approximately $4.2 billion. 

- Cornerstone OnDemand, backed by Clearlake Capital Group, acquired EdCast, a Mountain View, Calif.-based learning and experience platform for employees. Financial terms were not disclosed. 

- Genesis Research, backed by GHO Capital Partners, agreed to acquire Market Access Transformation, a Short Hills, N.J.-based payer research platforms provider. Financial terms were not disclosed. 

EXITS

- Nucor Corporation agreed to acquire C.H.I. Overhead Doors, an Arthur, Ill.-based garage door company, from KKR. A deal is valued at $3 billion.  

OTHER

- SMBC Aviation Capital agreed to acquire Goshawk Aviation, a Dublin-based aircraft leasing company, for $6.7 billion. 

- AVANT acquired PlanetOne, a Scottsdale, Ariz.-based technology sourcing partner. Financial terms were not disclosed. 

- Flink agreed to acquire Cajoo, a Paris-based grocery delivery startup. Financial terms were not disclosed.

- StoicLane acquired Triserv Appraisal Management Solutions, a Roswell, Ga.-based appraisal management company. Financial terms were not disclosed. 

SPAC

- Dragonfly Energy Corp., a Reno, Nev.-based lithium-ion batteries manufacturer, agreed to go public via a merger with Chardan NexTech Acquisition 2 Corp., a SPAC. A deal is valued at $500 million. 

PEOPLE

- Bain Capital Crypto, the Web3 and crypto investing arm of Bain Capital, hired TuongVy Le as partner and head of regulatory and policy. Formerly, she was with Worldcoin

- General Atlantic, a New York-based growth equity firm, hired Pablo Isla as a global senior advisor. Formerly, he was with Inditex Group

- H.I.G. Capital, a Miami-based alternative asset investment firm, hired Stephan Madsen as a managing director. Formerly, he was with BC Partners.

- Kline Hill Partners, a Greenwich, Conn.-based private equity secondaries firm, hired Raudel Yanez as managing director. Formerly, he was with Spring Bridge Partners

- SK Capital Partners, a New York-based private investment firm, hired Richard Jackson as managing director, head of capital markets. Formerly, he was with HSBC Group

Correction: Yesterday’s newsletter has been updated to show that GTCR acquired PathGroup from Pritzker and that Pritzker Private Capital and Vesey Street Capital Partners retained a minority stake in the company.

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