Why Chamath Palihapitiya Loves SPACs
Chamath Palihapitiya has become a Silicon Valley folk hero of sorts. After serving as an early executive at Facebook, Palihapitiya founded venture capital firm Social Capital, which made a number of hugely successful bets on tech companies, including Box, Slack, and SurveyMonkey. Social Capital's venture capital fund returned over 30% per year before it was closed. It made its investors rich and made Palihapitiya a billionaire.
Given that the venture capital model has worked so well for Chamath, why would he abandon it in order to focus on opening new special purpose acquisition companies (SPACs)?
A special purpose acquisition company is a blank-check shell company that raises money from investors in an IPO with the intention of later acquiring a private company, effectively taking a company public through acquisition. As the number of IPOs has waned, investors have piled into SPACs as an alternative way to invest in newly public companies.
Source Fool.com
