Special Funds Offer Shares of SpaceX and OpenAI—for a Price
Individual investors’ eagerness to own a slice of companies like OpenAI and SpaceX has fed an industry of special purpose vehicles that promise access to shares in hot startups, sometimes for a price that’s double what venture capitalists pay.
In the fall, a Miami-based firm called Sand Hill Road Technologies Fund offered its customers a hot opportunity: a chance to invest in SpaceX, which was arranging a deal for employees to sell some of their shares. But Sand Hill’s prospective investors, wealthy individuals whom the fund reached through online ads on Google and Meta Platforms apps as well as email and text, wouldn’t get the shares directly. And it would cost them.
Sand Hill told prospective investors they could get access to shares of SpaceX for $258 a share, roughly double the $135 that institutional investors at the time were expected to pay. To do this, they would invest in a fund—or special purpose vehicle—that was investing in another SPV buying the shares, according to Sand Hill founder and executive officer Robert Hodgins. If SpaceX ever went public or sold, the investors would also pay 20% of the profit, a fee called carried interest, on the investment, to Sand Hill, said Hodgins.
