Like many highly valued startups, SpaceX sometimes allows its employees to cash out some of their shares by selling to company-authorized outside investors.
TechCrunch has gotten a peek at an internal SpaceX document about such a tender offer from May 2022. Musk posted on X last month that SpaceX holds such sales for employees about every 6 months.
These documents offer interesting insights into the investors who are authorized to buy these secondary shares, and the good deals they get.
In this offer, investors paid $70 per share to employees, the document shows. That’s an enormous bargain compared to the share prices investors pay when investing in primary rounds — where the company sells the shares directly to raise capital.
During the primary sale in 2022, shares went for $270. (SpaceX hasn’t sold shares in a primary round at a $70 price since its Series G went for $77.46 per share, the documents say. That was back in 2015, according to PitchBook.)
Of course, the main reason for the giant discount in price is that employees own common stock and investors who buy into primary rounds typically buy preferred stock that entitles them to dividends and liquidation preferences. They are the first to be paid their investment back if the company ever sells itself.
In fact, this doc reveals that as of 2022, if SpaceX sold itself, the first $6.67 billion would be owed to preferred shareholders. Since then, the company has raised another $750 million, so that sum first paid to investors should likely be increased by at least that amount. Should SpaceX actually command its astronomical current valuation of $137 billion, these liquidation preferences — paying out investors first — won’t be a problem for employees or other common stock shareholders. But if one day the company goes for an under-$7 billion fire sale, common stockholders could get nothing.
In terms of the dividends, as late as 2019, internal documents seen by TechCrunch said that SpaceX never paid any. But if its board of directors wanted to declare dividends, they would be paid out in fixed amounts based on when investors bought shares. Those amounts range from a few pennies per share for shares bought in its earliest and cheapest rounds, to over $10 a share for those bought in later and most expensive rounds.
For employees, the news about their shares in 2022 was especially good. In February 2022, SpaceX did a 10-for-1 stock split of its Class A, B and C common shares. The preferred shares were not split. The documents don’t make clear what the differences are between the different classes of common shares. In public companies, different classes often have different voting rights. For example, one class of shares retained by the founder might have 10 votes per share, allowing founders to retain control of their companies while selling shares and cashing out.
In this case, it’s not clear when, if ever, SpaceX will go public. Secondary sales like this remain one of the only ways that employees have to sell their shares.
Another bit of good news for employees in this sale was that the $70 per share price was an improvement over the previous tender of $56 when adjusting for the stock split, Bloomberg reported at the time. And Bloomberg also reported last month that the next tender offer may be as high as $108 to $110 apiece.
Which investors got to buy?
One of the most interesting revelations in these documents was that only a handful of investors were named as authorized buyers. And most of them were among the SpaceX orbit, so to speak, meaning the investors are either vocal supporters of SpaceX founder Elon Musk or have had other, historically close ties.
They were:
Andreessen Horowitz (a16z) was authorized to buy nearly 4.3 million shares for almost $300 million. Interestingly, a16z isn’t a historical longtime major investor in SpaceX but managed to get on its cap table in a big way in the company’s $250 million raise in August, 2022, according to PitchBook. It also became a lead investor of SpaceX’s $750 million round, at a $137 billion valuation in 2023, CNBC reported.
The firm’s co-founder, Marc Andreessen, has known Musk for the decades that they’ve run in the same Silicon Valley tech billionaire circles. In the past few years, he has become a Musk champion, expressing admiration for the SpaceX, Tesla, and X CEO in all sorts of ways, from how Musk uses his money to keep launching startups to applauding Musk’s perseverance. Andreessen even publicly debated billionaire and rival VC Vinod Khosla (backer of OpenAI) on X (owned by Musk) after Khosla praised OpenAI shortly after Musk sued OpenAI. The debate caught Musk’s attention.
Aliya Capital Partners is associated with Aliya Growth Fund, which was authorized to buy just over 1.4 million shares for nearly $100 million. Aliya is a family office for the wealthy in Miami that says SpaceX is one of its largest holdings. Aliya — which has stakes in many prized startups like Figure AI, Impossible Foods, Anduril — notably chipped in $360 million when Musk bought Twitter in 2022 for $44 billion, Reuters reported. Even after Musk took an immediate ax to Twitter headcount, and his management style caused others (and advertisers) to flee, Aliya remained publicly optimistic. “We believe Twitter will produce a return of 4-5x in just a few years, with comparably limited downside risk,” Aliya chief executive Ross Kestin told Reuters in December 2022.
Aliya also happily champions SpaceX. In April, around the time that Bloomberg reported that its Starlink satellite business is still burning more cash than it brings in, Aliya took to LinkedIn to double down on Musk’s vision. It posted: “Recent reports indicate a staggering 500,000 new Starlink subscribers in the last four months — a feat far from coincidental — and over 2.7 million in total. It stands as a testament to profound vision matched by impeccable execution.”
Gigafund, whose co-founder is a SpaceX board member, was allocated over 1.4 million shares at a cost of nearly $100 million. Gigafund was co-founded by fellow PayPal mafia member Luke Nosek who joined Peter Thiel when he founded Founders Fund. Thiel and Musk are, of course, fellow PayPal mafia members. At Founders Fund, Nosek led the first VC investment into Space X, took a board seat, and has been on the board ever since. He left Founders Fund in 2017 to launch Gigafund. Gigafund’s co-founder, Stephen Oskoui, is also a former Founders Fund investor and has led the firm into deals with other Musk companies, including Neuralink and the Boring Company.
137 Ventures is associated with 137 Holdings, which was authorized to buy just under 1.1 million shares at a cost of nearly $75 million. 137 Ventures is a VC fund that’s interesting because its claim to fame is these kinds of secondary purchases. Founders Justin Fishner-Wolfson and Alex Jacobson met while at Founders Fund, working on its SpaceX investment. When Musk originally lobbied Thiel and Founders Fund to back his new rocket company at the time, the original investment in SpaceX was going to be around $5 million until Fishner-Wolfson advocated that it be much bigger. Founders Fund wound up writing a check that was about 20% of its fund and has continued to take large positions in other SpaceX rounds from other funds, Fishner-Wolfson told TechCrunch’s Connie Loizos in 2020. He launched 137 Ventures in 2011.
Point 2 Prove Investment was allocated 1 million shares, which cost $70 million. Point 2 Prove looks like a special purpose vehicle led by the secretive global investment firm Vy Capital, according to SEC Form D from July 2022. Vy was founded by Alexander Tamas, who spent his formative years at Yuri Milner’s DST. While Tamas doesn’t say much in public, and therefore isn’t a vocal Musk supporter, his company committed $700 million to Musk’s Twitter purchase, Bloomberg reported at the time. Vy also has a SpaceX stake and has invested in a number of other Musk companies like Boring and Neuralink. A prospectus for a Vy fund asserts that Tamas was the investor who secured for DST its early stakes in companies like Facebook, Airbnb, Spotify, Twitter, Alibaba and others. Marc Andreessen and his VC firm co-founder Ben Horowitz once described Tamas to Bloomberg as: “He’s on speed-dial for everyone trying to build the most successful, highest-scale, global Internet companies today.”
Atreides Management is associated with Atreides Special Circumstances Fund, which was allocated nearly 429,000 shares at a cost of nearly $30 million. The founder of Boston-based hedge fund Atreides, Gavin Baker, goes way back with SpaceX. Before founding Atreides in January 2019, Gavin spent 18 years at Fidelity, rising to manage the $17 billion Fidelity OTC Fund, his website says. He made his first investment in SpaceX while at Fidelity, and in 2022 SpaceX was Atreides’ largest position among the VC portion of its fund, Bloomberg reported. (Atreides had $3 billion in assets under management that year but currently has about $4 billion AUM, according to a recent SEC filing.) The fund has also had a significant stake in Tesla since 2019. And Baker is a public supporter of Musk. Just this month he penned a long post on X advocating to reinstate Musk’s $56 billion Tesla pay package and backing Musk’s desire to move Tesla’s incorporation to Texas.
TCP Exploration Fund 2022 was allocated over 357,000 shares for nearly $25 million. This is a fund associated with LA’s Troy Capital Partners founded by Myspace founder Josh Berman, according to SEC Form D. However, by several accounts, Troy’s managing partner, Anthony Tucker, is the one responsible for Troy’s SpaceX investment. Troy has been a backer since SpaceX’s Series J round in 2019, which valued the company at about $28 billion post-money, according to PitchBook. Troy, which emphasizes LA-based companies (although doesn’t restrict itself to them), was also an investor in the now-defunct Hyperloop One that had hoped to build speedy underground transport between San Francisco and LA based on Musk’s idea.
In addition, this SpaceX sale also authorized two more investors to buy about another $50 million shares combined as well, although the paperwork trail was too thin on both of them for us to determine their associations to Musk.
SpaceX and all of the funds did not respond to multiple requests for comment except for Atreides, which declined comment.
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