Few retail investors could pass on the chance to buy pre-IPO stock in SpaceX. But what seemed like the opportunity of a lifetime turned into a curse for some early SpaceX speculators.
A recent report from The Wall Street Journal profiled the New Jersey-based investment firm Late Stage Capital that claimed to offer access to pre-IPO companies like SpaceX.
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When a data engineer named Ram Rupireddy heard about Late Stage Capital in 2020, he excitedly wired $17,250 to snatch up shares in the satellite company. At that time, SpaceX was valued at roughly $58 billion. Flash-forward to 2026, and SpaceX’s valuation climbed to $1.77 trillion on its IPO day.
Understandably, Rupireddy felt elated about his decision to invest early, thinking he had 2,500 shares worth roughly $300,000.
However, Rupireddy started to worry when he couldn’t get into Late Stage Capital’s online portal. After multiple phone calls and emails, Late Stage Capital gave him some bad news. Apparently, the firm sold Rupireddy’s stock in 2024 at a significantly lower total value of $45,450.
Not only did Rupireddy never receive a notification about this sale, he has tax documents from Late Stage Capital in 2024 and 2025 that show he owned SpaceX shares. Despite this evidence, Late Stage Capital has yet to make Rupireddy whole.
And Rupireddy isn’t alone. According to The Wall Street Journal, there are about 100 other Late Stage Capital investors reporting the same problem, many of whom filed complaints with the SEC.
Moneywise emailed Late Stage Capital for further comment, but we only received a mailer-daemon reply saying the address couldn’t be found.
We also didn’t hear back from the SEC before the time of publication.
SPVs deny SpaceX investors’ dreams
The problem with many firms like Late Stage Capital is that they often didn’t hold a direct stake in the pre-IPO companies they promised. These entities operate as “special purpose vehicles” (SPVs), which can invest in the private market without filing public records or meeting SEC regulations.
Although some SPVs could have pre-IPO shares, many only own a portion of another SPV that holds these shares. The latter appears to be the case with Late Stage Capital.
Investigators at The Wall Street Journal discovered a Bahamas-based firm called Capital Truth had a portion of an SPV that owned SpaceX shares. Therefore, when Capital Truth sold its “SpaceX stake” to Late Stage, there was actually one degree of separation from the literal shares.
Note that, even if an SPV had SpaceX equity, retail investors aren’t legally buying the actual shares — they’re buying a stake in that SPV. It’s always up to the SPV’s discretion to honor their obligations and either distribute shares or cash to investors post-IPO.
Jared Fine, a partner at the global law firm Davis Polk, highlighted just how much trust is involved in these SPV deals. Fine told The Wall Street Journal, “At the end of the day, like anything in life, it comes down to, do you trust your counterparty or with whom you’re doing business.”
Be extra skeptical about SPVs
On paper, it’s illogical not to jump into a promising pre-IPO company like SpaceX. Although there are never guarantees, data from the University of Florida’s Jay R. Ritter shows that there’s a pretty good chance for shares to pop about 18.8% on their first day of trading. And that doesn’t factor in all the growth investors get to enjoy while companies mature in the private market.
Although SPVs have become an accessible way for retail investors to get private equity, you’ll have to forfeit a lot of control and transparency. Even in the best possible cases, these funds often have very high fees that will cut into any profits you may get.
Some of the hottest private companies like Anthropic and OpenAI have even put out public warnings against SPVs.
In Anthropic’s case, the AI lab said any “offers to invest in Anthropic’s past or future financing rounds through an SPV are prohibited.”
OpenAI didn’t go so far as to bar SPVs from offering shares. Still, it stressed investors need “to be careful if you are contacted by a firm that purports to have access to OpenAI, including through the sale of an SPV interest with exposure to OpenAI equity.”
For anyone still tempted to invest in an SPV, FOMO shouldn’t outweigh the risks of dealing with these firms.
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This article originally appeared on Moneywise.com under the title: A SpaceX investor thought he had $300,000 in shares — then discovered his firm sold them without notice
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.