Smart lock startup Latch Inc. is set to be the latest company to go public via a special-purpose acquisition company in a deal that values the company at $1.56 billion.

Under the deal, Latch will go public via TS Innovation Acquisitions Corp., a company backed by property developer Tishman Speyer. Latch will raise $510 million in cash, including $190 million from investors Chamath Palihapitiya, BlackRock, D1 Capital Partners and Fidelity Management & Research, according to Reuters.

SPACs are entities that are created for the sole purpose of buying another firm and taking it public. They became growingly popular in 2020 as a way to take a startup public without going through a traditional initial public offering. In December, David Kostin, Goldman Sachs head of U.S. equity strategy, said in a note that SPACs are more than just a fad and that “SPACs have low opportunity cost for investors when policy rates are near zero.”

The SPAC boom of 2020 has rolled into 2021. While 242 SPACs launched in 2020, the current rate in 2021 is sitting at five per day, Morningbrew reported, with a raise of $20 billion year-to-date. Others are warning, however, that SPACs are a risky bet and have shown very poor shareholder returns.

Founded in 2014, Latch specializes in keyless entry security systems designed to open and manage every door in an apartment building from a smartphone. The company also offers LatchOS, a full-building operating system of products, software and services designed to “make every building better.”

The operating system includes support for every door in a building including an apartment, front door, garage and gym with support for unlocking via the Latch App, door code, keycard or Apple Watch. Support is also available for guest and delivery management, including allowing “unexpected guests” access when required.

Although certainly innovative in its product offering, Latch has not been without controversy. In May 2019 tenants in a Manhattan apartment building sued their landlords over the forced use of Latch smart locks. The tenants cited privacy concerns in the lawsuit, arguing that the landlords should provide a physical key to a door, not just a smart lock.

The legal case was settled with the tenants getting keys. Latch noted at the time that though it was not a party to the litigation, it does not share users’ personal data with third parties for marketing purposes or make any revenue from data sharing.

Coming into its SPAC listing, Latch has raised $152 million in venture capital funding. Investors include Tefken Ventures, Avenir Growth Capital, CEAS Investments, Primary Venture Parkers, RRE Ventures, Balyasny Asset Management, Third Prime, Camber Creek, Alpaca VC and Brookfield Asset Management.

Image: Latch