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.