For asset managers, the reason you form a SPAC is because you will get upside in the form of convertible warrants that will net you ~20% ownership, essentially for free (cost of your time to find and close a deal, and minimal upfront cost), assuming the stock price outperforms the original issue price.
You should ask yourself why an existing owner who believes in the future of their company would be willing to give up 20% upside to avoid the cost of an IPO. I would suggest that the very act of giving up this 20% promote for a 'hot' unicorn tells you something about the valuation that the SPAC eventually does a deal at.
Or a company is raising a normal round of funding and this is suddenly a much better option - 1) funding, 2) liquidity in public markets, 3) backing of SC and whatever help they may offer. If I was raising 600M anyways, these added benefits seem like a good deal to me.
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?
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
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.
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%.
You should ask yourself why an existing owner who believes in the future of their company would be willing to give up 20% upside to avoid the cost of an IPO. I would suggest that the very act of giving up this 20% promote for a 'hot' unicorn tells you something about the valuation that the SPAC eventually does a deal at.