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by danielahn 3203 days ago
Why not just ask Social Capital to invest out of their VC fund? The only difference is liquidity in public markets, and if that's all you want, why are you giving up 20% of the upside from your current valuation when it would cost you less than 1% of your current to IPO yourself?
1 comments
probe 3203 days ago
I'm not sure where you're getting the 20% number...?

The ownership stake is dependent on how the negotiations go and how much the company is looking to raise at what valuation/terms. Social Capital will argue a liquidity premium should be applied, and I'm sure the company will say what you're saying (they can IPO <1%). However, they could both stand to benefit, so I see a deal happening with this SPAC

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danielahn 3203 days ago
SPACs issue units to their founders that will convert into approximately 20% ownership upon the successful completion of a deal
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probe 3202 days ago
No it's the founders of the SPAC (Chamath et. al) get 20% of the SPAC, which will then be diluted once they merge with the target startup.

I do think you do raise a fair question of what stake Chamath et. al should get for sourcing a deal. 20% is definitely high, and I think a typical SPAC is something like 5% sourcing stake for the owners.

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danielahn 3199 days ago
Sorry for late reply!

20% is standard SPAC comp.

Also yes, I apologize, you are right - they get 20% of the value of the SPAC, so if they buy 10% of a company, they are only getting 20% promote on that 10%.

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