Social Capital brings startups to public without IPOs

Social Capital's Hedosophia will bring public startups without initial public offering mechanism (IPO). The funding company headquartered in Palo Alto, Social + Capital Partnership, announces a special purchase acquisition company (SPAC) to host 'IPO 2.0'. This blank check company is specifically designed to buy private companies and bring them to the public without going through an traditional IPO process.

Tinuku Social Capital brings startups to public without IPO

Social Capital has raised US$600 million for a parent company called Hedosophia to be used to buy startup stocks. CEO of Social Capital, Chamath Palihapitiya, said on Wednesday it sold 60 million units for US$10 per piece. On Thursday, the unit traded up more than 3 percent at US$10.35.

Palihapitiya said the IPO process is bad where startups have been waiting longer to go public and impact on the company's difficulties to find liquidity on their stock. He believes this is what contributes to the considerable turnover of employees among the best beginners.

Palihapitiya said the IPO scheme in the stock exchange company is currently not practical. He will soon announce if the public wants to acquire a startup. Unlike other acquisitions, startups will remain in control of their business.

Palihapitiya targets companies in valuations of US$3 billion to US$20 billion. SPAC is nothing new, but Palihapitiya says it has found a formula that will attract unicorns who want to become a public company without going through traditional IPOs. This concept is claimed to make the process much more efficient.

"An acquisition by the SPAC company with a well-known, respected management team, the founders of technology companies, third party investors and their management team will provide a more transparent and efficient mechanism to bring the company to the public market," Palihapitiya said.