He Thought He Invested in SpaceX. Then His Shares Vanished.

**Jessica Mendoza** (0:05)
Back in 2020, a data engineer named Ram Rupareddy was feeling lucky. He had gotten a chance to buy into one of the hottest tech companies in the world.

**Ryan Knutson** (0:17)
He was speaking to friends, and one of them mentioned to him, Hey, I have some opportunities to buy into companies before they go public. And top on his list was the opportunity maybe to buy shares of SpaceX, Elon Musk's rocket company.

**Jessica Mendoza** (0:38)
Our colleague Corrie Driebusch spoke with Rupareddy about it.

**Ram Rupareddy** (0:41)
My friends knew that I invested in SpaceX for a long time. Wherever I go, they used to tease me, now you are a millionaire, you have this many stocks and all that stuff.

**Jessica Mendoza** (0:54)
Because Rupareddy got in as a pre-IPO investor, it meant that whenever SpaceX went public, he was set to potentially make a lot of money.

**Ryan Knutson** (1:04)
When he bought into the shares in late 2020 and early 2021, the valuation of SpaceX was around $58 billion.
So as that valuation grew, his plans grew as well. One of his children is going to be a senior this fall in high school. So in his head, this will pay for that college education.

**Jessica Mendoza** (1:32)
But the way Rupareddy was invested in SpaceX was pretty complicated. It was through something called a Special Purpose Vehicle, or SPV.

**Ryan Knutson** (1:41)
He wasn't buying the actual shares of the company. He was buying a share or an interest in a fund, and the fund supposedly held shares of the company.

**Jessica Mendoza** (1:56)
So he was a little bit removed.

**Ryan Knutson** (1:57)
He was a little bit removed, and as we continue, we'll understand how far removed he ended up being.

**Jessica Mendoza** (2:07)
SPVs can be a lucrative way to get access to private markets, but they can also be risky, and they're mostly unregulated. When SpaceX went public earlier this year, lots of investors made bank.
But Rupertti found out that his shares were missing from his account.

**Ryan Knutson** (2:27)
His dream of a windfall quickly turned into a bit of a logistical nightmare.

**Jessica Mendoza** (2:36)
Welcome to The Journal, our show about money, business and power. I'm Jessica Mendoza. It's Thursday, August 13th.
Coming up on the show, the SpaceX shares that vanished before investors could cash in.

**SPEAKER_4** (3:03)
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**Jessica Mendoza** (3:42)
For about 25 years, SpaceX operated as a private company.

**Ryan Knutson** (3:47)
So, private companies, they need a lot of money, especially private companies with as great of ambitions as SpaceX has.
They need money to fund that. So, throughout their growth as private companies, they sell shares to raise capital.

**Jessica Mendoza** (4:04)
SpaceX invited an elite group of people to invest in the company by buying those shares.

**Ryan Knutson** (4:13)
So, investors, venture capital funds, think family offices or other friends, as we've written about, friends of Musk himself, were early backers in SpaceX. So, every time SpaceX was doing a share sale, they were offered oftentimes first the shares to purchase.

**Jessica Mendoza** (4:34)
Okay.

**Ryan Knutson** (4:35)
But a rule that regulators have, that the Securities and Exchange Commission has, is that you can only have up to 2,000 investors who are listed on what is called like your capitalization table for a private company before you have to start putting out more financial disclosures. Otherwise, you essentially are almost forced to become a public company.

**Jessica Mendoza** (4:58)
So, over time, SpaceX would go back to the same pool of investors, who then found themselves with a lot of shares. And many of those investors realized they wanted to do something with them.

**Ryan Knutson** (5:10)
And maybe if think about a venture capital firm who has bought in for many, many years, they don't need to buy another $100 million worth of shares. But they don't want to miss out on that opportunity either. So, they started to turn around and say, you know what, we will buy, give us $50 million worth of shares. Say, I'm just giving a hypothetical.
We will create a fund.

**Jessica Mendoza** (5:40)
A fund or special purpose vehicle where investors can put their private company shares, in this case SpaceX, and sell exposure, also called interest, to someone who isn't one of the company's millionaire investors.