I have an offer to purchase an interest in spacex. Unfortunately it is through an LLC which will hold the actual stock and I get stock in the LLC. It makes me uncomfortable to not directly own the stock and adds all sorts of extra risk- Wondering if anyone has gone through with a similar arrangement? #spacex #ipo
I liked to join LLC deal
This isn’t super common but it does happen. You need to make sure the owners of the underlying shares are legit ( as in rich+trustworthy enough they won’t back out of the sale when spacex is liquid)
interesting. My concern so far is largely about the company creating and managing the LLC - not sure how to vet them.
Presumably this is some company that specializes in secondary market transactions. You should ask about previous deals they have done. Secondary sales are very common, I’ve just not seen the LLC approach used
Okay. Seems like there are aspects of SPAC that would apply here. You are buying stock in the LLC, right? Not in spaceX. So basically it will depend on what kind of deal the LLC makes with spaceX. Your shares won’t translate 1:1 from LLC to spaceX, right.
You need a private equity lawyer
Thats ok as long as LLC doesnt dilute and is holding SpaceX until ipo ... usually that might happen for accredited investors and other such requirements.
Sounds sketchy af
This is the only way to make private investment these days. It's actually a common arrangement. Warning: It is highly risky and not for everyone. Best to think that there is a possibility you may lose all this money. You need to be accredited investor (either $1M in bank not including the valuation of your house, or $200k in salary revenue/year, or $300k joint revenue with your spouse). Your qualifications need to be verified by the fund coordinator you are working with so they will have to vet you. You need to vet the reputation of the LLC as well to make sure you are not getting scammed. A few notes. You are basically investing into an investment fund. You don't technically "own" SpaceX stock, neither the LLC. SpaceX stock is not held by the LLC. SpaceX private stock is non-transferable - cannot be transferred until IPO. Can only be held by its (current/former) employees that got some RSU shares vested, or by some investors that actually participated in SpaceX investment rounds. Sometimes these people may want to get liquidity for some of these shares. Sometimes people have a child, new expenses, etc. So the SpaceX stock owners can made some contractual arrangement with private investment owners, which is basically an agreement that they will transfer this stock at the IPO time, in exchange for equivalent cash now. Important: They can change their mind at any time though (but then they need to pay back the LLC the amount of money they've received for the "agreement" plus some fees). This type of contractual deal is called is ROFR. Generally the LLC also adds a markup of around 15-25% to the stock on top of existing valuation. They offer no guarantees that the stock will be held until the IPO. The only thing going on in their favor is their reputation. https://en.wikipedia.org/wiki/Right_of_first_refusal
What this guy said. Stock is non transferrable and can't be assigned to an LLC
yeah, if you're not an employee and not actually participating in an offer round as a venture capital limited partner (10MM+??)... Beware. I've checked some offers for leveraging my pre-IPO stock outside the buybacks and agree with JKWj76 - it's a bunch of contacts that avoid ROFR, and not a good deal for the holder either. A bunch of people will be gambling to "sell" you a paper contract.
What is the difference to simply buying google shares and have spacex through them?
well, buying GOOG is like investing 99% in Google and 1% in SpaceX .. while OP clearly is intersted in most of his money buying SpaceX Not saying Goog is bad investment. but it's not what OP wants.
Ask Blinders
Yesterday
433
Why is our country owned by Israel? I don't want my tax dollars fund genocide. How can we stop this nonsense?
India
Yesterday
362
The craze of competitive exams in India
Tech Industry
Yesterday
1970
Lack of diversity in engineering division at X
Tech Industry
Yesterday
2365
1 vs 5 Million - no lifestyle change
Tech Industry
Yesterday
2795
Tech companies to avoid as a white guy?
Following