Chamath Palihapitiya has plenty of haters on the internet thanks to all the people who lost money investing in his SPAC deals, but he’s now admitting why those deals failed.
In a recent interview, the venture capitalist and All-In Podcast co-host was direct about what went wrong with his SPAC era. “My incentives were totally and fundamentally misaligned because I could do a deal and still get paid,” he said. “That is a blemish on my track record, and I’m gonna fix it.”
It’s a significant admission from someone who spent the better part of 2020 and 2021 being celebrated as the “SPAC King.”
What Chamath’s SPACs Actually Were
A SPAC — Special Purpose Acquisition Company — is essentially a blank-check vehicle. It raises money through a public listing, then uses that cash to merge with a private company and take it public, typically within two years. The appeal for the target company is bypassing the traditional IPO process: less regulatory scrutiny, faster timelines, and the ability to share financial projections that wouldn’t be allowed in a standard IPO prospectus.
Chamath went all in. Through his firm Social Capital Hedosophia, he launched his first SPAC series under the tickers IPOA through IPOF — and at the peak of the frenzy in early 2021, he filed SEC names for seven more, IPOG through IPOM, which never actually launched. He then ran a second series under the DNAA to DNAD tickers, targeting biotech. All in, he was involved in around 18 SPAC deals, counting his own vehicles and PIPE investments where he backed other sponsors.
The deals included some of the most hyped names of that era. Virgin Galactic (IPOA) was the flagship — the world’s first publicly traded commercial spaceflight company. Opendoor (IPOB) was pitched as the future of real estate transactions. Clover Health (IPOC) was positioned as a next-generation Medicare Advantage insurer. SoFi (IPOE) was the fintech darling. Each one came with a compelling narrative and a massive retail following.
The Numbers Tell The Story
The stock performance is brutal to look at in hindsight. Virgin Galactic is down roughly 98.5% from its listing price after a reverse stock split. Clover Health is down around 74%. Opendoor has lost about 63% of its value. ProKidney Corp, another Chamath-backed SPAC, is also down 74%. His biotech SPAC Akili, which made video games for ADHD patients, was delisted entirely.
SoFi is the one relative bright spot — it’s the only company from this cohort that has generated a positive return, and it reported its first profitable quarter in 2024. But even SoFi is down from its post-SPAC highs.
Across the full portfolio, investors who held everything equally would be roughly at breakeven — or a small loss — depending on when they bought and sold. That sounds acceptable until you put it next to the S&P 500’s performance over the same period, which made the comparison look embarrassing. Chamath himself acknowledged this in the interview: “If you own them all equally, maybe you’re almost at breakeven, but that’s quite sad considering what the S&P has done.”
The Incentive Problem He’s Now Admitting
The deeper issue was structural, and Chamath is now saying out loud what critics were saying all along. SPAC sponsors receive what’s called “founder shares” — typically around 20% of the SPAC’s equity — simply for completing a deal. The stock is usually priced at a fraction of what public investors pay. So the sponsor makes money when the deal closes, regardless of what happens to the share price afterward.
This created an obvious conflict. Chamath could identify a company, complete the merger, collect his founder shares and fees, and still come out financially whole even if retail investors who bought in at $10 saw the stock fall to $3. The incentive was to do deals, not necessarily to do great deals.
He resisted acknowledging this for a while. “I was too insecure to admit it,” he said in the interview. “I was like, ‘No, this is the game. This is how it works.'” But the stock performance across his portfolio eventually made the point undeniable.
What made this particularly painful for critics is that Chamath had positioned himself as a different kind of investor — someone democratizing access to high-growth companies for retail investors who couldn’t get into Silicon Valley deals. The SPAC structure, in practice, ended up doing the opposite for many of those investors.
The Attempt At A Reset
Chamath has returned to the SPAC market with a new vehicle called American Exceptionalism Acquisition Corp. A (AEXA), which raised $345 million and was reportedly more than five times oversubscribed. He’s structured it differently this time.
There are no warrants. His founder shares vest only if the stock rises at least 50% after a merger, with additional tranches at 75% and 100% gains. In other words, if the deal doesn’t perform for public investors, he doesn’t get paid. He’s also limited retail investor participation to just 1.3% of the offering — the rest went to institutional investors — and has said he’ll keep public commentary about potential targets minimal.
“If the deal is a dog, no one wins. If it is a winner, we will all win together,” he wrote in his launch post on X.
The AEXA is targeting companies in AI, energy, defense, and decentralized finance. On paper, the incentive structure is genuinely different from what he ran before. Whether that translates into better outcomes for investors remains to be seen.
What is clear is that Chamath understands the competitive sting of this chapter. “I am an incredibly competitive person,” he said. “I will perfect it until I win.” For the people who lost money the first time, that framing might ring hollow. But for what it’s worth, Palihapitiya is now admitting that his SPAC vehicles didn’t quite work out for their early investors.