SpaceX, one of the most celebrated startups of the modern era, has revolutionized space travel and satellite communications while remaining privately held. For employees eager to realize the financial benefits of their work, the company provides a unique opportunity: the ability to sell shares through secondary sales to authorized outside investors. This practice offers a glimpse into SpaceX’s financial workings, its shareholder dynamics, and the exclusive circle of investors surrounding Elon Musk's ventures.

TechCrunch recently obtained internal SpaceX documents detailing a tender offer from May 2022, shedding light on how these secondary sales operate and the parties involved. Elon Musk himself shared on X (formerly Twitter) that these sales occur approximately every six months. Such arrangements are a rare window into the financial ecosystem of a private company valued at an astonishing $350 billion.

The Mechanics of Secondary Sales

In May 2022, employees holding SpaceX common stock were offered the chance to sell shares at $70 apiece. Compared to the $270 per share paid during SpaceX’s primary fundraising round that same year, this price was a steep discount.

The disparity lies in the nature of the shares. Employees hold common stock, which lacks the perks of preferred stock offered in primary rounds. Preferred shares come with dividends and liquidation preferences, ensuring investors recoup their money first if the company is sold or liquidated.

Internal documents reveal that as of 2022, the first $6.67 billion from any SpaceX sale would go to preferred shareholders. With the company raising another $750 million since then, that figure has likely increased. While this arrangement safeguards institutional investors, it highlights the risks for common stockholders—if SpaceX were sold for less than $7 billion, employees holding common shares might receive nothing.

Despite these risks, secondary sales are one of the few avenues for employees to cash out. Unlike public companies, where shares are freely traded, SpaceX remains privately held, and an IPO remains uncertain.

The 2022 Stock Split

A significant development for employees came in February 2022, when SpaceX conducted a 10-for-1 stock split of its Class A, B, and C common shares. This move increased the number of shares employees held while adjusting the price per share proportionally. Preferred shares were not split, emphasizing their distinct status.

Stock splits often signal confidence in a company’s growth while making shares more accessible. For employees, the adjusted price of $70 in the May 2022 tender offer represented an improvement over the previous tender price of $56, adjusted for the split. Bloomberg later reported that subsequent tender offers might reach $108 to $110 per share, reflecting growing investor interest and SpaceX’s increasing valuation.

Authorized Investors: The Inner Circle

One of the most intriguing aspects of SpaceX’s secondary sales is the selection of authorized buyers. These investors are often deeply connected to Musk and his ventures, forming an exclusive "Musk orbit." The May 2022 tender offer named several prominent firms and individuals, many of whom are longtime Musk allies or significant stakeholders in SpaceX.

1. Andreessen Horowitz (a16z)

Andreessen Horowitz, a Silicon Valley powerhouse, was authorized to buy nearly 4.3 million shares for approximately $300 million. Though not an early SpaceX backer, a16z has emerged as a major investor in recent years. It participated in SpaceX’s $250 million round in August 2022 and led a $750 million round in 2023, valuing the company at $137 billion.

Co-founder Marc Andreessen is a vocal Musk supporter, frequently praising Musk’s vision and perseverance. Andreessen’s advocacy extends beyond SpaceX to Musk’s other ventures, including Tesla and Neuralink, solidifying a16z’s alignment with Musk’s ambitions.

2. Aliya Capital Partners

Miami-based Aliya Capital Partners, through its Aliya Growth Fund, was authorized to purchase over 1.4 million shares for nearly $100 million. Aliya is known for its substantial holdings in SpaceX and other high-profile startups. The firm contributed $360 million to Musk’s $44 billion acquisition of Twitter in 2022, maintaining public confidence in Musk’s leadership despite controversies surrounding the platform.

Aliya also champions SpaceX’s achievements, frequently highlighting the growth of its Starlink satellite business. In 2022, Starlink reached 2.7 million subscribers, a milestone Aliya attributed to Musk’s "profound vision and impeccable execution."

3. Gigafund

Gigafund, co-founded by Luke Nosek, a former PayPal colleague of Musk, was allocated over 1.4 million shares worth nearly $100 million. Nosek, an early SpaceX board member, has been instrumental in securing venture capital for the company since its inception. Gigafund also invests in other Musk-led ventures, including Neuralink and The Boring Company.

4. 137 Ventures

Specializing in secondary market investments, 137 Ventures was authorized to acquire just under 1.1 million shares for $75 million. Founded by Justin Fishner-Wolfson, who previously worked on SpaceX investments at Founders Fund, 137 Ventures has built its reputation by facilitating liquidity for employees of private companies like SpaceX.

5. Point 2 Prove Investment

Point 2 Prove, a special purpose vehicle tied to the secretive global investment firm Vy Capital, purchased 1 million shares for $70 million. Vy Capital, led by Alexander Tamas, has invested in several Musk ventures, including SpaceX, Neuralink, and The Boring Company. The firm also contributed $700 million to Musk’s Twitter acquisition.

6. Atreides Management

Boston-based Atreides Management, through its Special Circumstances Fund, acquired nearly 429,000 shares for $30 million. Founder Gavin Baker has long been bullish on Musk’s ventures, having invested in SpaceX while managing Fidelity’s OTC Fund. Atreides continues to hold significant stakes in both SpaceX and Tesla.

7. TCP Exploration Fund 2022

This Los Angeles-based fund, associated with Troy Capital Partners, purchased over 357,000 shares for nearly $25 million. Troy Capital has backed SpaceX since its Series J round in 2019 and has invested in other Musk-inspired projects like Hyperloop One.

Two additional investors were authorized to purchase a combined $50 million in shares, though their affiliations remain unclear due to limited documentation.

Strategic Implications

The selection of these investors underscores the close-knit ecosystem surrounding SpaceX. Many of these entities are longstanding allies of Musk, sharing his vision and benefiting from his success. Their presence as authorized buyers reinforces the idea that SpaceX values loyalty and alignment with its mission when facilitating secondary sales.

This approach ensures that shares remain in the hands of stakeholders who are likely to support SpaceX’s long-term objectives, whether through additional capital infusions, public endorsements, or strategic partnerships.

The Road Ahead

SpaceX’s practice of enabling employee liquidity through secondary sales offers a compelling model for private companies aiming to attract and retain top talent. By allowing employees to periodically sell shares, SpaceX provides financial rewards while maintaining control over its shareholder base.

With its valuation soaring and investor interest intensifying, SpaceX’s secondary sales are likely to remain a vital component of its operations. For employees, the prospect of rising share prices in future tenders offers further incentive to contribute to the company’s groundbreaking achievements.

Whether SpaceX eventually pursues an IPO or continues as a private enterprise, its ability to navigate the complexities of shareholder management while advancing its ambitious goals serves as a blueprint for other startups striving for global impact.

In the meantime, the intrigue surrounding SpaceX’s secondary market ensures that it remains a focal point for investors and industry observers alike. As Elon Musk and his team continue to push the boundaries of what’s possible, the world will be watching—and investing.

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