Meet the New Guard of Finance—and Save $100 On Your First YearUnlock the List

Chamath Palihapitiya. Photo by Bloomberg.

Chamath’s Pullback is a Sign of What's to Come for SPACs

Photo: Chamath Palihapitiya. Photo by Bloomberg.

The debate is done: the SPAC fad is over.

Chamath Palihapitiya, one of the biggest promoters of special purpose acquisition companies in recent years, is shuttering two of his SPACs and will be returning the money to investors. Palihapitiya, who merged SPACs with businesses such as Virgin Galactic, Opendoor and SoFi, couldn’t find any attractive businesses for the SPACs to buy. Is that a sign of what’s to come? Yep.

Here are some numbers: 676 SPACs trading on the market haven’t yet found a mate—a business with which to merge—according to SPAC Research. Of that group, 80% are likely to liquidate, predicts Jay Ritter, a finance professor at University of Florida who goes by “Mr. IPO.”

Why might that happen? Well, the original idea of SPACs as a way for a company to go public with a guaranteed amount of cash no longer holds true. Ritter said most SPACs that have merged this year with a business saw shareholders redeem 80% or more of their cash. That means businesses were merging with what was essentially an empty shell. They got a public listing out of it, but didn't get any cash. Where’s the fun in that?

Get access to exclusive coverage
Read deeply reported stories from the largest newsroom in tech.
Latest Articles
DEALS enterprise
Private Equity Firms’ Secret Weapon for Big Software Buyouts
Orlando Bravo, co-founder of Thoma Bravo LLC. Photo by Bloomberg.
When Thoma Bravo was drawing up the financing of its $8 billion acquisition of Coupa Software last year, the private equity giant didn’t turn to a bank, and it didn’t get a traditional loan. Instead, it tapped a group of non-bank lenders including Sixth Street for a relatively obscure type of financing—one that has been making its way into more and more multibillion dollar...
Latest Briefs
Roku Lays Off 6% of Workforce
Meta to Allow European Users to Opt Out of Personalized Ads
Alphabet’s DeepMind and Google Brain Set Aside Rivalry, Target OpenAI
Stay in the know
Receive a summary of the day's top tech news—distilled into one email.
Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
From left, Alphabet CEO Sundar Pichai, DeepMind CEO Demis Hassabis and Google Brain chief Jeff Dean. Photos by Getty, Bloomberg
Exclusive google ai
Alphabet’s Google and DeepMind Pause Grudges, Join Forces to Chase OpenAI
OpenAI’s success in overtaking Google with an artificial intelligence–powered chatbot has achieved what seemed impossible in the past: It has forced the two AI research teams within Google’s parent, Alphabet, to overcome years of intense rivalry to work together.
Art by Clark Miller.
Opinion startups
Don’t Build the Wrong Kind of AI Business
At a catch-up coffee a few weeks ago, a founder friend asked me, “What AI thing should we build?” It was the third time that week a founder had asked me the same question.
Bill Gurley in 2019. Photo by Bloomberg
Good Eggs Cuts Its Valuation 94% in Lifeline Financing as More Startups Get Desperate
As more startups struggle to raise money from venture capitalists and approach bankruptcy, they are going to extreme lengths to stay afloat.
Block chairman and co founder Jack Dorsey. Photo by Getty
Fintech’s Big Wakeup Call
Fintechs were supposed to transform banking by making it dead simple for users to open savings accounts or pay their bills.
Art by Clark Miller.
Market Research e-commerce culture
The Skin-Tech Devices Helping Execs Beautify in a Hurry
I’m always 29 at heart,” said Liyia Wu, CEO of ShopShops, a livestream shopping app for fashion, beauty and lifestyle products.
Art by Clark Miller
Surreal Estate real estate
Silicon Valley’s Realtors, Like Its Bankers, Are Having a Tough Month
In early March, Ken DeLeon, founder of DeLeon Realty, a Silicon Valley–based brokerage that sold more than $1 billion in homes in 2021, called one of his venture capitalist clients to discuss the purchase of a $20 million–plus megamansion.