SpaceX, the highly valued startup founded by Elon Musk, has been allowing its employees to cash out their shares through company-authorized secondary sales. These sales provide an opportunity for employees to sell their shares to outside investors at a discounted price. TechCrunch recently obtained an internal SpaceX document that sheds light on these tender offers and the investors who participate.
According to the document, investors paid $70 per share to employees, which is significantly lower than the share prices in primary rounds where the company sells shares directly to raise capital. In 2022, shares were sold in a primary sale for $270 per share. The reason for the discount is that employees own common stock, while investors in primary rounds typically buy preferred stock that comes with additional rights and privileges, such as dividends and liquidation preferences. This means that preferred stockholders are the first to be paid back if the company is sold.
The document also reveals that if SpaceX were to sell itself, preferred shareholders would be owed $6.67 billion. Since then, the company has raised an additional $750 million, so this amount would likely increase. However, if SpaceX were to sell for less than $7 billion, common stockholders could potentially receive nothing.
In terms of dividends, internal documents from 2019 stated that SpaceX had never paid any. However, if the board of directors were to declare dividends, they would be paid out based on when investors bought their shares.
In February 2022, SpaceX implemented a 10-for-1 stock split for its Class A, B, and C common shares. This was good news for employees as it increased the value of their shares. However, it is unclear when or if SpaceX will go public, so these secondary sales remain one of the only ways for employees to sell their shares.
One interesting aspect of the document is the list of authorized buyers who participated in the tender offer. These buyers were mainly investors with close ties to SpaceX and Elon Musk. For example, Andreessen Horowitz (a16z) purchased nearly 4.3 million shares for almost $300 million. Marc Andreessen, the co-founder of a16z, has known Musk for many years and has become a vocal supporter of his companies.
Other authorized buyers included Aliya Capital Partners, which is associated with Aliya Growth Fund, and Gigafund, whose co-founder is a SpaceX board member. 137 Ventures, a VC fund known for secondary purchases, also participated, along with Point 2 Prove Investment, which appears to be a special purpose vehicle led by Vy Capital. Atreides Management and TCP Exploration Fund 2022 were also authorized buyers.
It is worth noting that SpaceX and the funds involved declined to comment on the tender offer. However, the document provides valuable insights into the secondary market for SpaceX shares and the investors who participate.