After SpaceX went public in June, individuals who bought into funds promising shares of the company were eager for their paydays.
It wasn't so simple. A Wall Street Journal article last week featured an investor who is still trying to figure out what happened to the money he invested in a SpaceX fund in 2020.
Many readers wrote in saying they were in situations similar to that of Ram Rupireddy, the investor featured in the article. They expressed frustration, despair and some acceptance that the gains they expected to reap -- some in the seven figures -- might be gone.
"It was an educational experience," one reader wrote. Concerns about what are called special-purpose vehicles that facilitate such investments are top of mind following SpaceX's offering and ahead of anticipated IPOs from AI companies Anthropic and OpenAI. Here's some advice and questions readers are thinking about.
Beware eager sellers
Bharat Bhatt from Columbus, Ohio, said he decided against one offer to buy pre-IPO shares after the firm offering them said it would be willing to take $25,000 instead of the $50,000 it previously said was required. He said he became suspicious when the SPV operator only accepted wire transfers, and after one operator was willing to take his money even past its stated deadline to participate in the offer.
"It sounded fishy, and I did not take up the offer," Bhatt said. He said he wonders if investors read the full disclosures made by such solicitors.
Understand the chain of ownership
Another reader, Neil Osnato, spent more than a decade as an NYSE floor trader, which he said helped shape how he thinks about markets and the difference between what an investor believes they own and what they actually own.
He said the SpaceX SPV story caught his attention because the issue isn't simply disclosure, it is whether the investor can verify the complete chain between their capital, the SPV, the underlying shares, the rights to those shares, the authority to sell those shares, the liquidity event (in this case, the IPO), and the proceeds from that event.
Weigh when to sell
Sohel Saiyed said he is invested in OpenAI through an SPV but is now wondering whether he should remove the principal or wait for the AI giant's IPO, expected later this year or early 2027. He said he has paid a $3,000 fee since 2023 on an initial investment of $50,000. The account portal is currently showing a 227% return.
Treat it like gambling
One reader, Quinn R., said he has "gambled" about $1 million in several pre-IPO platforms and deal structures. Even if you deal with what he calls "legitimate" platforms, he said he believes you should be ready to accept a 100% loss as an accredited investor. "ANY market is a casino -- walk in with what you are willing to lose," he wrote.