SpaceX SPV investors won’t know their true holdings until post-IPO lock-ups lift

As SpaceX prepares to go public this Friday, uncertainty looms for investors who backed the company through special purpose vehicles (SPVs). Many of these investors are still unclear about the number of shares they are entitled to, or whether they will receive any shares at all. The use of SPVs, where multiple investors pool their resources to invest in a single entity, has a long history. However, SpaceX's IPO is unique due to the complexity of its investment layers. The skyrocketing demand for SpaceX shares has led to the creation of new SPVs from existing shares, resulting in structures that can be four or five layers deep. This IPO will serve as a significant test for the viability of such multi-layer SPVs. Recently, companies like Anthropic and Anduril have decided to prohibit these structures. Interviews with nearly a dozen SPV managers and secondary market investors revealed that those holding shares in lower-tier SPVs may find they possess fewer shares than anticipated, or in some instances, could end up with no shares at all. Investors will typically remain in the dark about their actual holdings until the company begins lifting its rolling lock-ups over the next four months. SPV managers will not distribute shares to their investors until they gain access to the shares themselves, as per industry sources. Lock-up agreements are designed to prevent insiders—including employees and venture investors—from selling their shares immediately following an IPO, which helps mitigate excessive selling pressure on the stock. The first layer of SPVs will have a 30-day window to distribute shares, which means that subsequent layers may face even longer waits. For instance, those in the bottom SPV layer might wait as long as eight to nine months before receiving their shares. A secondary investor, who chose to remain anonymous, warned that investors in convoluted multi-layer SPVs may be shocked to find that some of their expected shares will be diminished by fees taken by SPV managers. Communication breakdowns often plague these complex structures, with each layer only aware of the situation above them. This creates a dangerous scenario where investors may be misled, even unintentionally, by well-meaning SPV sponsors. The primary worry for those further down the hierarchy is the possibility of receiving no shares in SpaceX. Giovanni Pennetta, the former manager of Sestante Capital, was recently sentenced to four years in prison for fabricating access to non-existent allocations in Anduril. This incident raises the alarm that he might not be the only fraudulent player in the field. Investors at the bottom of these SPV structures are left needing to verify the legitimacy of all managers above them, a task made difficult by the complex and often opaque nature of these investments. Nick Davidov, founder of Davidovs Venture Collective, shared a troubling story about an investor who had not heard from their SPV manager for a year, despite expectations of substantial returns. Idan Miller, managing partner at Unicorns Exchange, believes that more unscrupulous actors will be exposed once the lock-ups are lifted. "When these SPVs begin selling their shares, some will inevitably be revealed as fraudulent or scams," Miller warned.