Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnSquareMore
Chamath advises individual investors to steer clear of his latest SPAC

Chamath advises individual investors to steer clear of his latest SPAC

Bitget-RWA2025/10/01 20:54
By:Bitget-RWA

On Tuesday, venture capitalist and All-In podcast host Chamath Palihapitiya introduced a new SPAC to the public markets. Named “American Exceptionalism,” this entity secured $345 million in funding, aiming to purchase startups in sectors such as energy, artificial intelligence, crypto/DeFi, or defense, and subsequently transition them into publicly traded companies.

However, Palihapitiya is urging individual investors to stay away: he explicitly recommends against buying shares, despite allocating a small portion—just over 1%—for public trading by retail investors, while the vast majority, 98.7%, has already been acquired by select large institutional investors.

“I want to limit retail investors’ participation in my SPACs,” he wrote on X, reiterating later, “We structured this almost entirely for institutional backers because, as I’ve come to realize, these vehicles aren’t suitable for most individual investors. They’re intended for those who can handle significant volatility, fit them into a diversified portfolio, and have the resources to support the company over time.”

It’s unusual for someone to launch an IPO and then discourage people from purchasing the stock. He even goes so far as to caution retail investors—including fans of the widely followed All-In podcast—who might ignore his advice and buy anyway. “If you’re a retail investor who still decides to go against my recommendation and invest in SPACs, please read our disclosures thoroughly and make sure you fully understand the risks.”

There’s an interesting reason behind these cautions. Palihapitiya was a driving force behind the SPAC boom from 2019 to 2021, earning him the nickname “SPAC King.” His first SPAC, Social Capital Hedosophia Holdings (IPOA), raised $600 million and took Virgin Galactic public in 2019. (That stock now trades below $4.) SPACs surged in popularity as a quick route to public markets during the venture capital valuation surge.

Yet, within a few years, data revealed that while SPACs could be profitable for sponsors like Palihapitiya and occasionally for the acquired startups, investors rarely saw gains. As the Yale Journal on Regulation noted: “SPACs have produced disappointing post-merger returns for shareholders for many years.”

Goldman Sachs even imposed a three-year ban on underwriting SPACs. In June, the firm lifted that restriction and resumed SPAC work, prompting Palihapitiya to poll his followers on X, asking, “Should I launch a SPAC?”

Nearly 58,000 people responded, with a strong majority—71%—voting no. This reaction stems from Palihapitiya’s own lackluster record. In June, Marketwatch compiled data showing that almost all of his SPACs had performed poorly, with many losing over 90% of their value since launch.

Despite this, as he rolled out his latest SPAC, Palihapitiya maintained that SPACs still benefit startups, their employees, and early venture investors.

“The reason for returning now is straightforward. The gap between private and public markets has only grown wider,” he posted on X, pointing out that there are even more unicorns now than in 2019. “Employees often hold equity that’s hard to turn into cash. Early backers are finding it tougher to reinvest in new startups.”

Still, he admitted that “it hasn’t all been smooth sailing.” Hence the caution for retail investors. (Social Capital declined to provide additional comments.)

He claims he’s working to address major criticisms: that SPACs primarily benefit their sponsors while leaving others at a disadvantage.

For “American Exceptionalism,” he says sponsor shares will only vest if the stock price rises by 50%, 75%, and 100%. “If the deal fails, nobody benefits. If it succeeds, everyone shares in the rewards,” he wrote.

But the central question remains: with all we know in 2025, should a startup go public through a SPAC, whether it’s Palihapitiya’s or another? History suggests that if long-term stock performance is the goal, the answer is likely no.

0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Earn new token airdrops
Lock your assets and earn 10%+ APR
Lock now!

You may also like

Exchanges Call on SEC: Deny Exemptions to Maintain Fairness in the Market

- WFE warns SEC against broad crypto exemptions for tokenized stocks, citing risks to investor protections and market integrity. - Tokenized stocks lack dividend rights, voting access, and custody frameworks, creating "mimicked products" with weaker safeguards. - SEC's sandbox-style exemptions risk regulatory arbitrage, allowing crypto platforms to bypass rules enforced on traditional exchanges. - Global bodies like IOSCO warn tokenization amplifies data integrity and custody risks, urging unified standard

Bitget-RWA2025/11/30 23:04
Exchanges Call on SEC: Deny Exemptions to Maintain Fairness in the Market

Decentralized AI Network Cocoon Takes on Centralized Titans with a Privacy-Centric Approach

- Telegram founder Pavel Durov launched Cocoon, a TON-based decentralized AI network enabling GPU owners to earn cryptocurrency by processing private AI requests. - The platform challenges centralized providers like Amazon and Microsoft by using Trusted Execution Environments (TEEs) to ensure secure, verifiable model execution with user data privacy. - Cocoon connects GPU providers with developers for confidential tasks, reducing reliance on costly intermediaries while aligning with ethical AI principles t

Bitget-RWA2025/11/30 23:04
Decentralized AI Network Cocoon Takes on Centralized Titans with a Privacy-Centric Approach

Ethereum News Update: Fusaka Upgrade Signals New Era of Unified Scaling for Ethereum

- Ethereum's Fusaka upgrade (Dec 3, 2025) introduces PeerDAS and BPO forks to enhance scalability via reduced data verification costs and incremental rollup capacity expansion. - Gas limit raised to 60M through "Pump The Gas" initiative lowers fees and congestion, while L2 data costs could drop 40-60% to boost developer adoption. - EIP-7917/7951 improves security and UX with deterministic finality and P-256 signatures, aligning Ethereum with fintech standards while reducing node storage demands. - Upgrade

Bitget-RWA2025/11/30 22:44
Ethereum News Update: Fusaka Upgrade Signals New Era of Unified Scaling for Ethereum

UAE's regulatory initiatives set the stage for a surge in institutional DeFi adoption

- DWF Labs commits $75M to DeFi projects enhancing institutional-grade infrastructure across Ethereum , BNB Chain, and Solana . - UAE's new Central Bank Law mandates licensing for DeFi protocols, balancing innovation with regulatory oversight and consumer protection. - Doma Protocol and ORA introduce liquid domain trading and cash-flow-driven models, expanding DeFi's functional scope beyond speculative tokenomics. - Institutional adoption faces hurdles including regulatory uncertainty, smart contract risks

Bitget-RWA2025/11/30 22:26
UAE's regulatory initiatives set the stage for a surge in institutional DeFi adoption