- Musk’s SpaceX has many investors for its next massive round, which may close in February, sources said.
- Sources said this deal could value the company at a minimum of $60 billion, up from a $46 billion in August.
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SpaceX has already lined up more than enough investors for its next massive round of private funding.
It’s a deal that could close in February and skyrocket the company’s valuation to at least $60 billion, according to three people who are familiar with the deal and known to Insider. These people said deal specifics were still being hammered out and that it was possible SpaceX’s valuation could reach as much as $92 billion — double what it was valued at in its most recent funding round in August.
The company, founded by the billionaire Elon Musk, started taking commitments from investors toward the end of last year and allocated the majority of the round to investors by mid-January. But there has been so much interest that the company is still in the process of finalizing details, the sources said.
The price per share is expected to land between $325 and $350, but the talks are ongoing and details have not yet been finalized, one person told Insider. This person and the others requested anonymity because they are not authorized by the company to speak publicly.
One unknown is the exact number of shares the company will issue. That detail will determine the size of the round, meaning the total amount of money SpaceX will raise, as well as the new valuation of the company.
In December, Insider reported SpaceX was in discussions for a new round of funding and that it was hoping to double its valuation from $46 billion to as much as $92 billion and looking to close the deal in mid-to-late January.
Sources said there was oversubscribed demand for the funding round, meaning investors wanted to buy more shares than the company planned to sell.
“There’s way more interest than availability,” one of the people close to the deal said.
This new deal comes after the Hawthorne, California-based company had a successful 2020 with fundraising, too. As one of the most valuable venture-backed US companies, SpaceX last raised $1.9 billion in new funding in August, which valued the company at $46 billion. That round was also oversubscribed, and SpaceX ended up boosting the size of the round because of strong demand, according to Bloomberg News.
The same scenario is likely playing out now with this round, one of the people with knowledge of the deal said.
“We expect this to be the biggest jump in valuation in SpaceX’s history,” the person added.
Employees will get to sell too, sources say
Though much of the deal was ironed out in January, the delay is because SpaceX is coordinating the primary funding round (shares sold by the company to investors) with a tender offer (shares sold by existing shareholders to approved buyers), one person said.
A tender offer allows stockholders such as employees to sell some of their vested stake.
SpaceX has a history of coupling funding rounds with such tender offers and is one of the only major startups to build an in-house solution to liquidity. Employees can gradually buy their vested stock options in SpaceX, a former employee previously told Insider, and staffers typically receive a 10% discount on the last price.
But to keep tight control of its shareholders, SpaceX uses an internal stock market that matches employee shareholders with approved investors. Like most private tech startups, it does not allow employees to sell their shares at will to anyone that offers to buy them.
Plenty of money and time
“They have plenty of money from the last round and want to take their time with this,” another person familiar with the deal told Insider.
“Bret was throwing around a few numbers and scenarios,” the person added, referring to Bret Johnsen, SpaceX’s chief financial officer, discussing the timeline for closing this new funding deal and settling on a valuation.
A representative for SpaceX did not immediately respond to a request for comment.
Cash for 2 major space businesses
SpaceX wants more funding to fuel two audacious projects, a satellite-internet business called Starlink and its reusable rocket system, Starship.
With Starlink, SpaceX is launching dozens of internet-beaming satellites into low-Earth orbit every few weeks to provide faster, lower-lag internet service than traditional telecommunications satellites. Musk told Insider in 2019 the business could net up to $50 billion a year once it was fully deployed, and perhaps involve nearly 12,000 satellites or more.
But Starlink will be a money-losing business for the foreseeable future. “We are focusing on making it not go bankrupt,” Musk said earlier this year of it.
That’s because SpaceX spends about $2,400 to make each terminal for the service, a source told Insider, but it charges $500 for a kit, plus $100 a month for service — prices the company sees as appropriate for the market.
Analysts say it may take SpaceX 3 million subscribers and several years to start breaking even.
Starship is a rocket envisioned by Musk where half of the vehicle would be reusable. If SpaceX can achieve that, Musk says the cost of launching into space may drop thousandfold. Starship may eventually help build a moon base for NASA, ferry people to Mars, and create a hypersonic passenger travel network for Earth.
Its mostly successful first test occurred in December, but the rocket still exploded.
Musk also has plans for major investment in its Boca Chica, Texas, facility where the rocket is being developed, Insider previously reported. This may even involve getting into the businesses of natural-gas extraction and purification, as well as electricity generation, at the site to support its Starship operations, until the day Musk has invented ways to fuel the program with renewable energy.
To keep the two projects on track, SpaceX will likely have to continue successfully raising billions of dollars while avoiding serious missteps. But one of the sources previously told Insider they doubted that would be an issue, given the company’s growing history of successes.
“There’s a crazy amount of appetite from larger firms for investing in late-stage companies that have a proven track record,” they said.