Chamath Palihapitiya Returns To SPACs: Past 18 Deals, Investments Average Loss Of 14%

Investor Chamath Palihapitiya, once known as the "SPAC King," is back with a new SPAC, signaling a potential top or bottom for the SPAC market, with investors cautious after past returns from completed mergers.

Here's a look back at Palihapitiya's SPAC history, including deals he helped finance, details of the new SPAC and what's next.

The New SPAC: Palihapitiya filed for a planned listing of American Exceptionalism Acquisition Corp A on the New York Stock Exchange with the ticker AEAC.

The SPAC plans to raise $250 million and units come with no warrants this time around.

Palihapitiya's new SPAC plans to invest in a company in the sectors of artificial intelligence, clean energy, U.S. defense or decentralized finance.

The new SPAC follows Palihapitiya’s asking his followers on X if he should launch another SPAC. The majority of respondents (70.7%) said no to a new SPAC with over 55,000 people voting in the poll. Palihapitiya brushed off the results and said there is "no crying in the casino!!," which hinted that he may be bringing a new investment vehicle to market in the future.

In the filing for American Exceptionalism Acquisition Corp A, Palihapitiya mentions that SPACs have in the past had inefficient pricing mechanisms, misaligned incentives and no long-term impacts. The new SPAC will attempt to change that by making founder shares only vest if the stock hits milestone prices of $12.50, $15.00, $17.50 and $20.00, instead of simply the $10 offering price.

The Palihapitiya SPACS: Palihapitiya originally planned to bring SPACs public with tickers IPOA to IPOZ—six SPACs launched under these tickers within the Social Capital Hedosophia umbrella. Palihapitiya also launched four SPACs under the DNAA to DNAD tickers aimed at the biotech sector.

Here is a look at the SPAC deals and their performance. The performance is based on the listing price of $10 and does not take into account warrants.

IPOA: First SPAC deal completed by Palihapitiya was Virgin Galactic SPCE, -98.5% after reverse stock split
IPOB: Merged with Opendoor Technologies OPEN, -62.9%
IPOC: Merged with Clover Health Investments CLOV, -74.4%
IPOD: Liquidated without a target at $10.01, Even
IPOE: Merged with SoFi Technologies SOFI: +138.3%
IPOF: Liquidated without a target at $10.01, Even
DNAA: Merged with Akili Interactive, which was acquired by Virtual Therapeutics for $0.4340 per share, -95.7%
DNAB: Liquidated without a target at $10.35, +3.5%
DNAC: merged with ProKidney Corp PROK, -76.2%
DNAD: Liquidated without a target at $10.35, +3.5%

The PIPE Deals: Along with his own ten SPACs, Palihapitiya has funded eight SPAC deals as a member of the PIPE (Private Investment in Public Equity) — a way to attract investment from accredited investors.

Here is a look at those deals and the return to date based on a $10 starting point.

MP Materials MP: rare earth mining company, +582.0%
Desktop Metal: 3D printing company, later acquired by Nano Dimension NNDM at $5.295 per share, previous 1-for-10 reverse split adjusted price $0.5295, -94.7%
Metromile Inc: insurance company, later acquired by Lemonade Inc LMND, shareholders got 0.05263 shares of LMND or around $1.03 at the time, worth $3.10 today, -69.0%
Proterra: electric bus company, went bankrupt, -100.0%
Latch LTCH: enterprise SaaS company, -98.8%
Sunlight Financial: residential solar financing company, went bankrupt, -100.0%
Renew Power RNW: India's largest renewable energy company, -22.8%
Berkshire Grey: robotics and automation company, later acquired by Softbank for $1.40 per share, -86.0%

The Returns: Palihapitiya has been a part of a total of 18 SPACs, counting his own, and the deals he helped finance as part of the PIPE. The list includes 10 of his own SPACs, with six reaching deals and four liquidating. Palihapitiya was also part of eight PIPE deals.

It's important to note that this isn't Palihapitiya's returns, as he sold out of many of the stocks earlier and also received founder shares and other incentives like warrants. The returns do not factor in warrants for retail investors below.

Here is the performance of Palihapitiya's SPACs based on category:

18 Total SPAC Deals: -13.98% average return
10 Chamath-led SPACs: -26.24% average return
6 Chamath-led SPACs with Deals: -44.90% average return
8 PIPE Deals: +1.34% average return

What's Next: Palihapitiya's new SPAC has A in its title, which suggests that more could be on the way. The new incentive plan for founder shares could create more long-term value in a deal and encourage investors to stay for years, rather than cashing out quickly, as some, including Palihapitiya, have done in the past.

Based on the past history of Palihapitiya SPAC deals, the new offering might get minimal interest from investors.

Palihapitiya is a co-host of the "All-In Podcast," which has proven popular with investors. He is also well connected to Silicon Valley and the White House, which could make an investment in a new Chamath SPAC more attractive than it would have been in recent years.

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