VCs Look to Create a Backdoor to Public Markets for Startups

Silicon Valley venture capitalists are looking to create a publicly traded fund with a single focus: investing in mature startups to provide them with a way to reach a wider group of investors while skipping some steps involved with an initial public offering.

The vehicle, Social Capital Hedosophia Holdings Corp., plans to raise cash from investors in an IPO and then invest the cash in one or more late-stage companies, according to a securities filing Wednesday. The fund, which is what’s known as a special purpose acquisition vehicle, will be able to set the value of its holdings and let backers trade its shares without the private companies having to go through their own IPOs. The value of the shares then fluctuate based on market demand.

A spokeswoman for the fund declined to comment, citing U.S. Securities and Exchange Commission rules. The Wall Street Journal earlier reported the news.

Chamath Palihapitiya, managing partner of venture firm Social Capital and an owner of the Golden State Warriors basketball team, will serve as the new entity’s chief executive, while Ian Osborne, co-founder of the venture firm Hedosophia, will serve as president. Adam Bain, the former chief operating officer of Twitter Inc., will become a director.

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