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Social Capital Hedosophia’s SPACs offer privately held companies another avenue to the public market. Before you hop on the bandwagon, bear in mind that this fresh-faced company has yet to establish a solid track record for itself.
Social Capital Hedosophia is a special purpose acquisition company (SPAC) founded in 2019 and headquartered in Palo Alto, California. The blank check company was founded by tech executive and venture capitalist Chamath Palihapitiya and created with the intention of acquiring privately held companies to bring them to the public market.
While still relatively young, Social Capital Hedosophia made its fair share of headlines when it acquired Virgin Galactic — the British commercial spaceflight company — in 2019. Following the success of its first merger, Palihapitiya says there’s plenty more in the works for Social Capital Hedosophia.
Both Social Capital and Social Capital Hedosophia were founded by Chamath Palihapitiya. And although they share similar names, they’re separate entities with unique investment objectives.
Social Capital is Palihapitiya’s private venture capital firm, founded in 2011 and also headquartered in Palo Alto. The firm backs companies from a variety of industries, including Bustle, Imperium, Slack, SurveyMonkey and Wealthfront.
Unlike Social Capital Hedosophia, Social Capital doesn’t acquire the companies it invests in. Instead, the venture capital firm focuses on funding startups in emerging markets with high growth potential. To date, it has made 381 investments and 49 exits.
You will need a brokerage account to invest in Social Capital Hedosophia in one of two ways:
Despite its short operating history, Social Capital Hedosophia has been busy — and has big plans for upcoming acquisitions.
As of October 2020, Social Capital Hedosophia has just one company under its belt: Virgin Galactic. Find it on the New York Stock Exchange under the ticker symbol SPCE.
After raising $600 million from public investors, the SPAC went on to acquire Virgin Galactic in 2019. Palihapitiya now owns nearly 14% of the commercial spaceflight company’s shares and serves as chairman of the board.
Following the acquisition of Virgin Galactic, Social Capital Hedosophia is preparing to acquire Opendoor and Clover Health through Social Capital Hedosophia II and III, respectively. Because SPACs merge with the companies they acquire and cease to operate as independent entities, Social Capital Hedosophia must start a fresh SPAC for each company it plans to acquire.
Social Capital Hedosophia II and III are already spoken for, but Chamath Palihapitiya has already initiated the process of establishing Social Capital Hedosophia IV.
During an episode of his All-In Podcast, Palihapitiya revealed he has reserved the ticker symbols IPOA through IPOZ on the New York Stock Exchange. Its first SPAC, Social Capital Hedosophia I (IPOA) merged with Virgin Galactic. Iterations II (IPOB) and III (IPOC) are slotted for Opendoor and Clover Health. And as for the rest of its ticker symbols? It’s anyone’s guess.
In the same podcast episode, Palihapitiya said he has $100 million tied up in each deal to demonstrate his commitment to potential investors. As of October 2020, Social Capital II (IPOB) and Social Capital III (IPOC) are available for public investors to purchase on the NYSE.
To invest in Social Capital Hedosophia, you’ll need a brokerage account. Compare your options to find the best fit.
Companies like Social Capital Hedosophia offer privately held companies as an alternative to the traditional IPO. It has ambitious plans for the future and the ticker symbols to show for it — but much remains uncertain about the future of this special purpose acquisition company.
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