(Reuters) - Wall Street thought 2020 was a frenetic year for special purpose acquisition companies (SPACs). Yet with more than nine months to go until the end of 2021, initial public offerings (IPOs) of U.S. SPACs this week surpassed the $83.4 billion the sector raised in all of 2020, data from industry tracker SPAC Research showed. This is also more than the $29.5 billion that IPOs of companies that operate businesses - as opposed to being empty shells like SPACs - have raised since the start of the year, according to IPOScoop data. The breakneck growth of what was once an obscure backwater of capital markets reflects the popularity of SPACs as an alternative vehicle to traditional IPOs. By merging with a SPAC, companies can debut in the stock market with forecasts and predictions that are not as regulated as they would be in IPO investor roadshows. In exchange, however, they often give away a larger stake of themselves than they would have in an IPO. “If you had told me at the beginning of the year that we would already exceed 2020 totals before the end of the first quarter, I would not have believed it. It’s been quite phenomenal and there are no real signs of the momentum stopping meaningfully anytime soon,” said Carlos Alvarez, head of permanent capital solutions at UBS Group AG. The $200 million IPO of Build Acquisition Corp on Tuesday pushed the total raised by U.S. SPACs in IPOs above last year’s haul, which was already more than six times the previous all-time record, according to SPAC Research. The value of mergers between SPACs and private companies has also already outpaced last year’s total deal volume, even though the sector has not been a one-way bet for investors. Graphic: SPAC craze sees 2021 topple IPO record -Currently, 408 SPACs with $131.1 billion in cash are looking for companies to merge with. Based on the rough rule of thumb that a SPAC typically merges with a company 3-5 times its size, this equates to potentially over $600 billion in purchasing power. SPACs have gained immense popularity among amateur retail traders as well as Wall Street funds that are hoping to ride the coattails of the prominent investors launching them. Billionaire Bill Ackman, tennis player Serena Williams and former U.S. House speaker Paul Ryan are among those who raised SPACs. SPACs have burnished their appeal by focusing on deals in futuristic industries such as electric vehicles, self-driving cars and space exploration. While they are typically afforded two years by investors to find a deal, most of them now clinch a merger within months. “The amount of liquidity in the system right now is unprecedented. Not only is there a great pricing umbrella for these deals to come to market, the cost of holding a SPAC is significantly lower for investors as business combinations are coming remarkably fast,” said Warren Fixmer, managing director at Bank of America and co-head of its SPAC practice. EASY COME EASY GO The rise of SPACs has been fraught with risks. While many have scored meteoric gains on finding a deal, others have quickly seen their stock rallies reversed. Churchill Capital IV Corp’s shares had run up more than 500% last month in anticipation of a merger with electric vehicle startup Lucid Motors, yet they slumped on the deal’s announcement as investors became more skeptical about the prospects of it making a car in the short tern. The Defiance Next Gen SPAC Derived ETF, an exchange-traded fund (ETF) that tracks SPACs, fell as much as 30% off its record high this month following its launch in September. It is currently trading around 15% off its high. “Where SPACs go from here is going to be 100% dependent on what happens with the broader equity market,” said Michael Ohlrogge, an assistant professor of law at New York University who has studied SPAC performance. “When there is a correction, though, there’s going to be a lot of pain in the SPAC market.” (This story corrects 2020 volume figure to $83.4 billion from $83.5 billion)