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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 grouping of six special purpose acquisition companies (SPAC) founded in 2019 and headquartered in Palo Alto, California. The blank check company group 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 headquartered in San Francisco. 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. However, Social Capital has also created six SPACs.
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 February 2021, Social Capital Hedosophia has a handful of companies under its belt including Virgin Galactic (SPCE); Opendoor (OPEN), a real estate portal; and Clover Health (CLOV), a Medicare Advantage plan. Virgin Galactic and Opendoor trade on the New York Stock Exchange (NYSE), while Clover Health trades on the Nasdaq.
Investors should note that Clover Health is facing a legal battle. Short-selling specialist specialist Hindenburg Research on February 5 claimed Clover Health “lured retail investors into a broken business facing an active, undisclosed” Department of Justice investigation. Clover Health claimed it is cooperating with the SEC in an investigation launched by the report.
In January 2021, SoFi announced that it will go public by merging with Social Capital Hedosophia Holdings V. The merger values the millennial-focused financial services firm at $8.65 billion. Also known as Social Finance, the company emerged in 2011 as a student loan refinancer. It now offers various financial products including credit cards, mortgages and brokerage accounts that offer access to cryptocurrency.
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) merged with Opendoor and Clover Health. Iteration V (IPOE) plans to merge with SoFi. 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 2021, Social Capital II (IPOB) and Social Capital III (IPOC), Social Capital IV (IPOD), Social Capital V (IPOE) and Social Capital 6 (IPOF) are available for public investors to purchase on the major exchanges.
To invest in Social Capital Hedosophia, you’ll need a brokerage account. Compare your options to find the best fit.
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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.
To invest in a SPAC or a company it acquires, you’ll need a brokerage account. Compare your options across multiple platforms to find a broker that can cater to your budget and investment needs.
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