SPAC King Folds, Bringing Blank-Check Era Closer to Its End

In October 2020, Chamath Palihapitiya raised $2.4 billion from investors for three blank-check companies. He used a previously obscure financial vehicle known as a SPAC. All he had to do was find startups to buy, and he stood to make hundreds of millions of dollars. The Facebook-executive-turned-venture-capitalist loves high-stakes poker, and it looked as if he’d found a can’t-lose bet.

Other financiers agreed, and for two years it seemed as if anyone with some name recognition—including Shaquille O’Neal andPaul Ryan—had a SPAC. The same Reddit investors who made Dogecoin and GameStop Corp. soar earned huge returns by buying ...