Chamath Palihapitiya shares SPAC regret on "The Axios Show"
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Chamath Palihapitiya knows what you think of his brief reign as the "SPAC King." And he agrees with you.
- Palihapitiya, the longtime VC and podcast host who's now running an AI startup called 8090, sat down with Axios for the next episode of "The Axios Show."
Driving the news: Palihapitiya hinted that his new SPAC -- called American Exceptionalism Acquisition Corp. -- has found an acquisition target, but that the due diligence and negotiating process isn't yet complete. And then he volunteered this about his past SPAC efforts:
- "The most important thing I learned, which I fought from accepting for a while, was that my incentives were grossly misaligned. You pushed me on that a lot. Andrew Ross Sorkin did, I was too insecure to admit it. I was like, 'No, this is the game. This is how it works.' But I think you guys were right. My incentives were totally and fundamentally misaligned because I could do a deal and still get paid."
- "I don't think I did bad deals in the way I underwrote them, but I think the stock performance is what the stock performance is and that's undeniable."
Catch up quick: As he notes, this is a different perspective than Palihapitiya shared the last time Axios interviewed him, at the inaugural Axios BFD event in October 2022.
- At the time, he argued that poor SPAC performance was part and parcel of broader market pullbacks after a "decade-plus of zero interest rates ... that perverted the markets and distorted reality."
- He added that retail investors had held on too long in all sorts of equities, but that it was a natural part of investing in equities.
Zoom in: Palihapitiya's new perspective perhaps isn't surprising, given that AEAC has a much different structure from his past SPACs.
- For example, his shares only vest if the post-merger company trades at a 50% premium to the IPO price (i.e., $15 or more).
- Whether it succeeds (e.g. SoFi) or struggles (e.g., Virgin Galactic, Clover Health) remains to be seen.
State of play: The SPAC market is in something of a second boom.
- There currently are 251 pre-deal SPACs with nearly $47 billion in available capital, plus another 110 live deSPAC deals, per SPACResearch.com.
- Other 73 SPACs are waiting to price IPOs.
Look ahead: The full episode drops tomorrow on our YouTube channel and at Axios.com. Lots of discussion of AI CEO doomerism, regulation, immigration Trump, and more.
