In October 2020, Chamath Palihapitiya raised $2.4 billion from investors for three blank-check companies. He used a previously obscure financial vehicle known as a SPAC. All he had to do was find startups to buy, and he stood to make hundreds of millions of dollars. The Facebook-executive-turned-venture-capitalist loves high-stakes poker, and it looked as if he’d found a can’t-lose bet.
Other financiers agreed, and for two years it seemed as if anyone with some name recognition—including Shaquille O’Neal and Paul Ryan—had a SPAC. The same Reddit investors who made Dogecoin and GameStop Corp. soar earned huge returns by buying shares of almost any SPAC. Palihapitiya called it “IPO 2.0” and reserved the ticker symbols IPOA to IPOZ, one SPAC for each letter of the alphabet. In November 2020 he told Kara Swisher on her podcast that he was “all in.”
But on Sept. 20, Palihapitiya said he was closing two SPACs and returning $1.6 billion. He said he couldn’t find any companies to buy for good prices. It was as if he were folding his cards and walking away from the table. The SPAC king was saying the SPAC boom is over.
