Sep 20, 2022 - Economy & Business

Chamath Palihapitiya is shuttering two tech SPACs

Chamath Palihapitiya
Chamath Palihapitiya. Photo: Michael Kovac/Getty Images for Vanity Fair.

Venture capitalist Chamath Palihapitiya has decided to wind down a pair of tech-focused blank check acquisition companies after failing to find adequate merger targets.

Behind the scenes: Palihapitiya says the decision reflects how many privately held tech companies have yet to reset their valuations, despite the massive fall in public tech stock valuations. He adds that the risk/reward are more promising in biotech, and that he plans to keep two biotech-focused SPACs open.

  • It also comes as the overall SPAC market has struggled with shareholder redemptions, particularly from hedge funds, prior to merger closures.

The big picture: Palihapitiya, a venture capitalist and onetime Facebook executive, has become one of the SPAC market's most active sponsors. He's raised 10 of them, six focused on tech and four on biotech.

  • The tech SPACs, done in partnership with Hedosophia, have completed four deals, including Virgin Galactic, Opendoor, Clover Health and SoFi.
  • The biotech SPACs, done in partnership with Suvretta Capital Management, recently closed mergers for both ProKidney and Akili Interactive.
  • The SPACs being closed are called Social Capital Hedosophia Holdings Corp. IV (NYSE: IPOD) and Social Capital Hedosophia Holdings Corp. VI (NYSE: IPOF). All proceeds will be returned to shareholders.
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