Like many other highly valued startups, SpaceX lets its workers sell some of their shares to outside investors approved by the company as a way to cash out.
Has seen an internal SpaceX memo from May 2022 that talks about a job offer like this. Musk wrote on X last month that SpaceX has sales like this for its workers about every six months.
It’s interesting to read about the buyers who are allowed to buy these secondary shares and the great deals they get.
It shows that investors paid employees $70 per share in this deal. Compared to the prices buyers pay for shares in primary rounds, where the company sells the shares directly to raise money, that’s a huge bargain.
Shares sold for $270.00 at the initial public offering in 2022. SpaceX hasn’t sold shares in a main round at $70 since its Series G, which sold for $77.46 each, the papers say. Pitchbook says that was in 2015.
Workers have common stock, and investors in the first round usually buy preferred stock, which gives them the right to dividends and liquidation preferences. This is the major reason for the huge price drop. Those people will get their money back first if the business ever sells itself.
In fact, this document shows that favored shareholders would be owed the first $6.67 billion if SpaceX sold itself in 2022. That amount should probably be raised by at least that much because the company has raised another $750 million since then. Employees and other common stockholders won’t have a problem with these liquidation preferences, which mean paying out investors first, if SpaceX really does reach its astronomical present value of $137 billion. People who own common stock could lose everything if the company ever has a fire sale for less than $7 billion.
Inside information seen by TechCrunch in 2019 said that SpaceX had never paid any profits. Its board of directors could, however, decide to pay dividends. If they did, investors would get set amounts of money based on when they bought shares. A few pennies per share for shares bought in the first and cheapest rounds, to over $10 per share for shares bought in the last and most expensive rounds.
Employees were very happy to hear about their shares in 2022. SpaceX split its Class A, B, and C common shares in 10 for 1. This happened in February 2022. There was no split of the preferred shares. What’s different about the different types of common shares is not made clear in the papers. When a company is public, different groups of people often have different voting powers. One type of shares that the founder keeps might have 10 votes per share, for example. This lets founders keep control of their business while selling shares and getting cash.
It’s not clear when or if SpaceX will go public at this point. There are still only a few ways for staff to sell their shares, and this is one of them.
Another good thing about this sale for employees was that the price of $70 per share was higher than the previous offer of $56 per share, according to a story from Bloomberg at the time. Bloomberg also said last month that the next bidding offer could be as high as $108 to $110 per share.
Who Got To Buy Those Stocks?
The fact that only a few investors were named as authorized buyers was one of the most interesting things These papers showed. And most of them were “in the orbit” of SpaceX, which means that the investors are either big fans of Elon Musk, the founder of SpaceX, or have had other close ties in the past.
These Were:
It was okay for Andreessen Horowitz (a16z) to buy almost 4.3 million shares for about $300 million. Pitchbook says that a16z was a big investor in SpaceX’s $250 million raise in August 2022, even though the company hasn’t been a major investor in SpaceX for a long time. CNBC said that it was one of the main investors in SpaceX’s $750 million round, which valued the company at $137 billion in 2023.
Andreessen, who helped start the company, has known Musk for a long time because they both know a lot of tech billionaires in Silicon Valley. He has become a Musk fan over the past few years, praising the CEO of SpaceX, Tesla, and X in many ways, such as how he uses his money to keep starting new businesses and his determination. Andreessen even had a public argument with OpenAI backer and billionaire rival Vinod Khosla on Musk’s phone, X, after Khosla hailed OpenAI soon after Musk sued OpenAI. What was being said interested Musk.
It was okay for Aliya Growth Fund, which is connected to Aliya Capital Partners, to buy just over 1.4 million shares for almost $100 million. Aliya is a family office in Miami for rich people. It says that SpaceX is one of its biggest holdings. An important fact is that Aliya put $360 million into Musk’s purchase of Twitter for $44 billion in 2022. Aliya has shares in many successful startups, such as Figure AI, Impossible Foods, and Anduril. Aliya stayed publicly positive even after Musk fired everyone at Twitter right away and his management style drove others (and sponsors) away. Aliya CEO Ross Kestin told Reuters in December 2022, “We believe Twitter will produce a return of 4-5x in just a few years, with relatively low downside risk.”
Aliya is also a happy supporter of SpaceX. Around April, when Bloomberg said that SpaceX’s Starlink satellite business was still losing money, Aliya went on LinkedIn to support Musk’s mission even more. It said, “Recent reports show that Starlink has gained an amazing 500,000 new subscribers in the last four months—this is not an accident—bringing the total number of subscribers to over 2.7 million.” It shows that someone had a big idea and then carried it out perfectly.
A SpaceX board member is one of the founders of Gigafund. The company was given over 1.4 million shares, which cost almost $100 million. Luke Nosek, who was also a member of the PayPal gang and helped Peter Thiel start Founders Fund, helped to start Gigafund. Thiel and Musk are both members of the PayPal gang, that much is clear. Nosek led the first venture capital investment into Space X at Founders Fund. He then joined the board and has been there ever since. In 2017, he quit Founders Fund to start Gigafund. Stephen Oskoui, one of the founders of Gigafund, was also an investor in Founders Fund. He has led the company to make deals with other Musk companies, such as Neuralink and the Boring Company.
It was okay for 137 Holdings, which is connected to 137 Ventures, to buy just under 1.1 million shares for almost $75 million. 137 Ventures is an interesting VC fund because it is known for making these kinds of second-hand deals. The owners of 137 Ventures, Justin Fishner-Wolfson and Alex Jacobson, met at owners Fund, where they both worked on an investment in SpaceX. Musk first asked Thiel and Founders Fund to back his new rocket company. The initial investment in SpaceX was going to be about $5 million, but Fishner-Wolfson pushed for it to be much bigger. To make a long story short, Founders Fund wrote a check for about 20% of its fund. According to Fishner-Wolfson, other funds have continued to put a lot of money into SpaceX rounds since then. In 2011, he started 137 Ventures.
Point 2: Show that Investment was given one million shares, which were worth $70 million. A secretive global investment company called Vy Capital is in charge of Point 2 Prove, which is what an SEC Form D from July 2022 says. Alex Tamas started Vy. He learned a lot while working at Yuri Milner’s DST. Tamas doesn’t say much in public, so he’s not a big Musk fan. However, Bloomberg claimed at the time that his company had agreed to give Musk $700 million to buy Twitter. Vy also has a share in SpaceX and has put money into a number of other Musk companies, such as Boring and Neuralink. A Vy fund prospectus says that Tamas was the investor who got DST early stakes in businesses like Facebook, Airbnb, Spotify, Twitter, Alibaba, and more. “He’s on speed dial for everyone trying to build the most successful, largest, global Internet companies today,” Marc Andreessen and Ben Horowitz, co-founder of the venture capital firm Andreessen Horowitz, once told Bloomberg about Tamas.
There is an Atreides Management fund called the Atreides Special Circumstances Fund that was given almost 429 thousand shares for almost $30 million. Gavin Baker, who started the Boston-based hedge fund Atreides, has a long history with SpaceX. Gavin ran the $17-billion Fidelity OTC Fund for 18 years at Fidelity before starting Atreides in January 2019. This is what his website says. While he was at Fidelity, he made his first investment in SpaceX. According to Bloomberg, in 2022, Atreides’ biggest position in the VC part of the fund was in SpaceX. A recent SEC filing shows that Atreides now has about $4 billion in assets under care, up from $3 billion that year. The fund also has a big share in Tesla, which it has had since 2019. And Baker publicly backs Musk. This month, he wrote a long post on X calling for Musk’s $56 billion pay deal to be reinstated and supporting Musk’s plan to move Tesla’s incorporation to Texas.
Over 357,000 shares worth almost $25 million were given to the TCP Exploration Fund 2022. Based on an SEC Form D, this is a fund run by Troy Capital Partners in Los Angeles that was started by Josh Berman, who also started MySpace. Several sources, though, say that Anthony Tucker, Troy’s managing partner, is the one who made the SpaceX purchase. According to Pitchbook, Troy has been a backer of SpaceX since its Series J round in 2019. At the end of the round, the company was worth about $28 billion. Troy invests in companies based in Los Angeles, but not just those companies. It also put money into Hyperloop One, a company that tried to build fast underground transportation between San Francisco and Los Angeles based on Musk’s idea but failed.
In addition, this SpaceX sale gave permission for two more buyers to buy about $50 million worth of shares together. However, there wasn’t enough information about either of them for us to figure out if they were connected to Musk.
Many times, SpaceX, the funds, and everyone else but Atreides were asked to speak, but they all declined.
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