A SPAC IPO sells units, typically at $10, each containing a share and a fraction of a warrant. The cash sits in trust earning interest. The sponsor has a deadline, usually 18 to 24 months, to complete a deal or return the trust. Sponsors receive founder-shares worth about 20% of the post-IPO equity for a nominal sum.
Before a deal is announced the shares behave like a short-dated bond: downside is limited by the redemption right, upside comes from the warrant and deal speculation. After announcement they trade on the merits of the target.
Example: a $300M SPAC holds $10.10 a share in trust across 30M shares. The sponsor's 7.5M founder shares cost $25,000 and are worth $75.7M at trust value, a cost of roughly 25% of the public shareholders' capital.
Related: de-spac, spac-redemption, founder-shares, shell-company, warrant