Chamath Palihapitiya explains what a PIPE is | Clip of the All-In Podcast EP13

on January 16, 2021

What is a Pipe, explained by Chamath Palihapitiya in the All-In Podcast EP13

A pipe is a private investment in a public enterprise and basically what that means, is that you're making the round bigger right. So it's kind of like Sequoia Capital (Sequoia Capital is an American venture capital firm) does your Series A and invests 10 million. I would come in and put another 10 million and now your Series A is 20 million. Same terms as Sequoias round, except you're now just grossing up the amount of capital.


Why is that helpful?

Well what it does is, it allows somebody to price the deal, so in this case David's SPAC sponsor priced the deal, did the due diligence and decided to underwrite Metromile at that price. Then they came to me and said, do you want to come and join this round essentially? And I got to know the business, a lot of things that David said basically are true.

The thing that I will say is, like you know everybody talks about the value of machine learning right? And data oriented learning! The most obvious thing that you can do, is if you learn on top of a huge subset of data, especially out in the real world, like driving data or any other kind of information is, you should be taking risk on top of it. This is why sort of these next generation insurance companies to me are so interesting, because it's probably where you're going to see, machine learning be used that just massive, massive scale. You're just going to reprice risk and make it as David said much more dynamic. So anyways they showed it to me, I really like the product, the metrics are really amazing and so I joined. It's great I'm really excited for Friedberg.