Blockchain Innovation Now Allows Investment in SpaceX
Private equity investing is a very niche investing market that requires large amounts of money and strong connections in order to do well. Most people don’t realize how hard it is to obtain shares in these companies on the secondary market. It’s not like the stock market where the shares are broadly available and tradeable. If you can’t find a private investor willing to sell their shares (and this will cost you a significant amount in terms of legal fees), then your next best option is to wait until another more public capital raise is executed.
Elon and IPOs
Elon Musk, the CEO of SpaceX, has made it relatively clear that it is unlikely there will ever be an IPO for SpaceX. The company is doing well on its own, and he seems to regret ever making Tesla a public company, as that has led to several headaches for him. Shareholder intervention, communication issues, and the complexity of managing a public company are all reasons he may continue to avoid it.
As we’ve seen with recent IPOs, there is heavy demand for these types of stocks because of the lower exposure they have. Generally the rule is that the lower the liquidity, the lower the price will be. This is because there is a higher risk involved in holding that stock (or token).
So with this highly competitive market of investors trying to get into stocks like SpaceX, if there were a way to invest without being connected to the company early on. It is normally required that investors must be accredited in order to acquire shares in companies. This means they either have an annual income of $200k or total assets of $1MM. Similar regulations apply in the EU.
The Business Model
But what regulations can’t prevent is the distribution of tokens that represent an economic interest in one of these private companies. The basic business model is to acquire shares in SpaceX and then distribute the rights to receive income from those shares. Tokens would be issued on the Ethereum blockchain that
Ambisafe is an asset tokenization company that has partnered with an investment bank and law group, and this represents a significant economic innovation in the industry. The fund they created together is called Unicorn Equities, and has been created with the intention of avoided speculators. This is generally what regulators are most worried about, and by fixing the price of the asset, the legality and proper administration of the process is supported.
Decentralizing Silicon Valley
In a way, this is the promise of decentralized markets, and part of why cryptocurrencies are so powerful in terms of the ideals they espouse. The ability to access Pre-IPO investments as a retail investor has not previously existed, and it could start to level the playing field in the space. Rightfully so, many have criticized the concentration of wealth in Silicon Valley.
By working with Ambisafe it may soon be possible to invest in many other high profile but low liquidity investments. The entry threshold for SpaceX tokens will be $100, which means you can go test out the process today, and then decide if further investment is feasible in the future.
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