Story of SPAC King

 

Chamath Palihapitiya

Chamath palihapitiya is Sri Lankan born American Canadian billionaire. He’s such a great

example of his entrepreneurial skills and innovative ideas that change the world of finance and

investing. He almost becomes one of those one-name people who listen in finance circles.

After he complete his early Facebook executive journey in 2011, Chamath made a name

for himself and also started making angel investments on the side with his money.

Chamath is the founder and CEO of social capital, which provides funds and technology for

startups. Chamath founded Social Capital in 2011 to invest in companies in fields being ignored

by other venture capitalists, like the health sector, financial services, and education. However, the

firm has since expanded to invest in tech companies like Amazon, Tesla, and Slack. We can

identify some great entrepreneurial skills such as risk-taking and not being afraid of trying new

things from his character.

 

Thanks to the investment skills he managed to build billion dollar empire at age of 32. He

highlights that the best way to become successful in business is own equity percentage. At

an early stage, he accepted minority share ownership of the company instead of a paycheck.

In 2011, he left Facebook and started his fund, the social capital partnership with his wife,

the firm changed its name to social capital in 2015. Through the fund Palihapitiya invested

a number of companies including Secondmarket, Slack, and yammer. As of 2015, the fund had more

than 1.1 Billion $ in total assets under management, and most of them came from other

investors who believed in Palihapitiya's vision.

 

Innovation and invention

 

In 2018, Social Capital became mainly a permanent capital model and launched two SPAC

platforms.SPACs are used for special-purpose acquisition companies.

These platforms were created, according to Social Capital's website to "provide an alternative

the growth path for companies to go public while continuing to make public and private

investments, with a broad focus across climate science, life sciences, crypto/decentralized

finance, and deep tech.

 

In 2019, he sponsored a company that merged with Virgin Galatic. (Company of Sir Richard

Branson) later selling a large part of his stake for $200 million in March 2021. He continues to

sponsor Special-Purpose Acquisition Companies IPOs.

 

Chamath Palihapitiya raised six special purpose acquisition companies (SPAC) in 2020,

including one with Virgin Galactic founder and billionaire businessman Richard Branson. He

also invested in two companies going public via black-check vehicles in January: innovative

lock maker Latch and solar lender Sunlight Financial.

 

SPAC

Palihapitiya known as king of SPAC. This is the one form of way that he introduces special

purpose acquisition companies to the general public and make the public aware of this.

SPACs are commonly formed by investors or sponsors with expertise in a particular industry or

business sector and pursue deals in that arena. SPAC founders may have an acquisition target

in mind, but don't identify that target to avoid disclosures during the IPO process.

Called "blank check companies," SPACs provide IPO investors with little information prior to

investing. SPACs seek underwriters and institutional investors before offering shares to the

public. During a 2020-2021 boom period for SPACs, they attracted prominent names such as

Goldman Sachs, Credit Suisse, and Deutsche Bank, in addition to retired or semi-retired senior

executives.

 

The funds SPACs raise in an IPO are placed in an interest-bearing trust account that cannot be

disbursed except to complete an acquisition or it will return the funds to investors if the SPAC

is ultimately liquidated.

 

Chamath is confident in adapting new ideas. He will be able to uncover investment ideas that

traditional asset managers won’t be able to find in fact he claims that he would rather have 500

billion dollars managed by 500 people than a small group of fund managers. This investment

philosophy is a bit different from the current context.

However, in this way, he added a tremendous diversification approach to his fund because the

people who manage Chamath’s money will be investing in a variety of companies with varying

attitudes. His ultimate goal is to build the world’s best-performing Investment Company for next

50 years.