My first private startup investment was into SpaceX in June of 2020 at roughly $230 per share. This valued the company at roughly $42B~.
It is extremely difficult to get access to SpaceX shares but my friend Gali approached me with the opportunity.
Initially, I was hesitant for a few reasons:
The minimum investment was $25K which at the time was 5X bigger than any investment I had ever done in stocks or crypto.
We were creating an SPV (special purpose vehicle), which is basically an LLC with a sole purpose to invest in another entity. But, it became meta pretty quickly when our SPV was buying into another SPV which owned SpaceX shares.
As I dug deeper into the process, I realized how much I didn’t know.
There were fees that we needed to pay upfront to set-up our own SPV. Then there was an 8% upfront fee we needed to pay the SPV we were investing into. In addition to all of that, if any profits are generated at a liquidation event in the future, we would give 10% of our profits to the SPV we invested into which is known as carry.
This whole process was confusing and expensive to say the least.
I was quite hesitant and I remember reaching out to three people for advice on the investment:
My Dad: My father was skeptical of all the fees and thought the details about the SPV we were investing into were sketchy.
My Financial Advisor: My financial advisor wasn’t sure that SpaceX really had that much more room to grow their revenue and the valuation was high ($42B at the time).
My Mentor: My mentor said that it’s best to dollar cost average your money into various Vanguard ETFs. He sent me a few articles and said that most people think they are great investors, but really aren’t. Best to compound your money slowly over decades.
All of this advice was clearly saying “don’t do it you idiot!”
I remember calling up Gali with my dad on the phone so that Gali could share more details about the investment. My dad started to get a bit more convinced but was still skeptical.
Gali ended the phone call by saying “whether you invest or don’t invest, I really don’t care. This investment is totally up to you and I’m just sharing this opportunity.”
That night I remember staring at the investment docs on my computer. I wasn’t so much reading the docs, but rather meditating on the investment decision at my desk.
I had to ask myself what I really wanted to do with my hard earned capital. What did I think was the right choice in my gut?
After pushing out everyone else’s opinions, I gathered my thoughts and realized that this was a once in a lifetime investment opportunity and something I truly wanted to do.
I ended up investing the majority of the money and getting my brother Noah and my girlfriend Elana to invest a small amount so I didn’t have to invest so much of my own money.
At the last minute before the deal closed, my investment was trimmed down a bit from $25K to $17.5K. I ended up investing $12.5K and Noah and Elana each took $2.5K.
The SPV that Gali created for us was called SpaceFilche LLC which I thought was a cool name for a legal entity. Everyone is always so formal when they create a legal entity so I respect that Gali doesn’t lose his laid back touch.
All of the paperwork and wire details were done through a platform called Assure which specializes in helping people easily spin-up SPVs.
SpaceFilche LLC raised about $225K~ in total and I am extremely proud to be apart of that entity as well as to own SpaceX shares.
As of this writing, the market cap for SpaceX is roughly $100B with a current share price at $560 which means we doubled our investment in the first year. Of course, there are plenty of fees that actually make our return much lower, but we are most certainly up on our investment already.
While it’s exciting to know that this investment has gone up, I see SpaceX as a very long-term investment and I won’t be seeing this capital anytime soon. I might hold onto these SpaceX shares until 2040 at the earliest which sounds crazy to say. Thinking about this capital is completely irrelevant to any capital that my present day self has. What’s most special to me is to own a small part in humanities future into the stars.
I am excited to watch SpaceX take humanity to the Moon, Mars and the stars over the decades to come.