After the coronavirus pandemic jump-started demand for prescription delivery services, six-year-old Capsule Pharmacy decided to raise money to expand into new cities, hoping to target more customers who don’t want to visit pharmacies in person. One option it considered was to combine with a special purpose acquisition company, which would give it cash and a public listing at the same time. By January, the company had hired investment bank Allen & Co. to find a suitable SPAC, according to a person familiar with the discussions.

But after vetting offers, the New York startup abandoned the SPAC discussions and decided instead to raise $300 million in private funding at a valuation of more than $1 billion from firms that invest in public stocks and private startups, such as T. Rowe Price and Durable Capital Partners. The venture route won out, says a person familiar with the company, because it gave Capsule faster access to money than the SPAC listing would have.

Capsule’s change of heart symbolizes how much the SPAC market has cooled down since the frenzy of last fall and winter. At that time, money from SPACs was so plentiful that young startups began considering SPAC mergers as an alternative to private rounds to raise money. And companies that would have gone public via an initial public offering often pursued a SPAC deal instead.