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Introduction to the SpaceX deal

  • Recording has started.

  • Good attendance.

  • Not hard to get people to join SpaceX deal.

"We have very good attendance."

Appreciation for participants

  • Thank you for joining.

  • We truly appreciate your time.

  • Let's get started.

"Thank you everyone for joining. We truly appreciate you giving us some of your time here."

Introduction to the SpaceX deal

  • Brown Street Ventures (BSV) is putting together its third SpaceX deal.

  • BSV has been consistently investing in SpaceX over the last two and a half years.

  • Valuations have steadily risen for SpaceX, making it a strong investment.

"BSV is putting together its third SpaceX deal. We have been consistently investing in SpaceX over the last two and a half years."

Overview of SpaceX's valuation

  • SpaceX is the most valuable private company in the world.

  • Despite market volatility, SpaceX's valuation has steadily risen over the past three years.

  • The current valuation is $150 billion.

"SpaceX is not only the most valuable private company in the world, but its valuation has steadily risen despite market volatility."

Impact of market volatility on private valuations

  • Private valuations have taken a hit due to public market volatility.

  • However, private placement investment remains lucrative in the long term.

  • SpaceX is one of the rare private companies whose valuation has not dipped.

"Private valuations have taken a hit due to public market volatility, but SpaceX's valuation has steadily risen."

Exercise of right of first refusal

  • SpaceX has the right of first refusal in equity transactions.

  • After Elon submitted his tender, SpaceX started exercising its rights for any shares being sold.

  • This raised the price and affected ongoing negotiations.

"After Elon submitted his tender, SpaceX started exercising its rights for any shares being sold."

Current stage of negotiations

  • Discussions are in pretty late stage with three different parties.

  • Final price point is not yet determined.

  • BSV aims to go with the best price point and terms.

"Discussions are in pretty late stage with three different parties. BSV aims to go with the best price point and terms."

Deal Details and Price Points

  • Getting all the finer details in place has taken some time.

  • The final price point for the deal will be between $94 and $100 per share.

  • The goal is to have the price as close to $94 as possible or at least no higher than the midpoint between $94 and $100.

  • The expectation is that the price will land somewhere in the midpoint range.

"We know that the price points that we have it at, that we will have it at, are lower than the current range which is north of $100 at the lowest and I've seen it as high as approaching $160 a share."

  • Starlink is currently the majority of SpaceX, constituting about 60-70%.

  • Starlink is a huge company within a very large company.

  • It is responsible for providing internet globally via satellite and has left all competition in the dust.

  • Elon Musk has said that he's waiting for Starlink to stabilize revenue-wise before it goes public.

Starlink is huge, doing incredible things in the realm of providing internet globally via satellite.

SpaceX's Plan to Go Public

  • SpaceX will absolutely go public one day, but first, a part of SpaceX will be spun off and go public.

  • The part of SpaceX that will likely go public first is Starlink.

  • If Starlink is spun off into a new company and goes public, investors who have invested in SpaceX will receive shares of Starlink.

  • The remaining investment will still be in the private entity that is SpaceX.

Starlink will be spun off into a different company and it will go public.

  • Elon Musk has given a timeline of 2-3 years for SpaceX and Starlink to separate.

  • There are rumors that Starlink might IPO as early as the end of 2024.

I've heard rumors from sources that have a track record of being plugged in that Starlink might IPO as early as the end of 2024.

Best Timing to Invest in SpaceX

  • The most bang for your buck would be to invest in SpaceX before the Starlink IPO takes place.

  • Despite the company's current high valuation, it is not too late to invest in SpaceX.

  • SpaceX has a promising future, including deals with NASA and potential as a trillion-dollar company.

Absolutely, the best time to invest in SpaceX is before the Starlink spin-off and IPO.

Dr. Rafiq's participation and technical difficulties

  • Dr. Rafiq is still on mute and is requested to unmute.

  • Send a message in the chat if Dr. Rafiq is unable to unmute.

"Dr Rafiq if you're still on mute, maybe try and come back in. Yeah, you just send a message saying he can't seem to unmute. Dr Rafiq just try to see if you can type exactly. Yeah if you type it in the chat we can do that. Yeah, of um we have another question from Chris."

Setting minimum and maximum purchase limits

  • The minimum purchase for this deal is set at $25,000.

  • There is no maximum limit on the investment.

"Hey Mom, I can't remember if you mentioned this or not, is there a minimum to purchase and are we also setting a maximum? There is, um, the maximum, uh, okay. As far as minimums go, we are keeping a 25k minimum. Um, on this deal, however, it, um, it's, uh, there's really no maximum on it, is that correct Sam? Right, the minimum we're keeping is 25, correct? Okay, and this is one of the rare opportunities where we don't set a maximum."

Reason behind the minimum investment threshold

  • The minimum threshold is set at $25,000 due to the preference of sellers who usually require a minimum investment of $1 million.

  • The sellers have agreed to consider investments as low as $500k for this particular deal.

  • If the investment reaches $1 million, it may allow for a reduction in the share price.

"The reason the minimum on this, even though there was a minimum threshold for us to meet in order to actually even be able to talk to the sellers because these are sellers that are directly on the Cap Table... They don't really entertain small checks at all, in fact, the smallest check they'll entertain is usually a million dollars, but because we have previous relationships, they said to us, 'we'll entertain as low as 500k for you guys, right.'"

Timeline and paperwork for investment commitment

  • Firm commitments for investment are expected by the end of the week.

  • Paperwork will be sent to the commitments, with a finalized price to be modified and sent later.

  • The goal is to have the paperwork completed and know the number of investors and capital in the deal by the end of next week.

  • The final stage of negotiation can begin once the investor list and commitments are finalized.

"Timeline to make the investment is unfortunately a little short, so we're looking to get firm commitments in really this weekend... and by the end of next week, I want the paperwork completed and I want to know the number of investors we have in the deal and the capital we have in the deal because then that's when the final stage of my negotiation begins, right?"

  • Blue Origin is looking to approach the internet service from a lower altitude.

"How to compare the Starlink with Blue Origin as far as the internet service goes? Blue Origin will be from lower altitude... they have different approaches."

"Timeline to make the investment is unfortunately a little short, so we're looking to get firm commitments in really this weekend... and by the end of next week, I want the paperwork completed and I want to know the number of investors we have in the deal and the capital we have in the deal because then that's when the final stage of my negotiation begins, right?"

Importance and expertise of SpaceX

  • SpaceX is unparalleled in various aspects such as the number of satellites in orbit, launch experience, success rate, and payload capability.

  • Other aerospace companies have not yet solved the challenge of reaching low Earth orbit efficiently and effectively.

"No one is close to SpaceX in the number of satellites that are in orbit that have launched. No one has close to the experience that SpaceX has in launches, the success rate that SpaceX has and launches."

Challenges in achieving low Earth orbit

  • Blue Origin is attempting to achieve lower altitude launches than SpaceX, but this presents significant challenges due to the proximity to Earth's orbit and the increased energy requirements.

  • Aerospace companies have not yet overcome this obstacle.

"Lower altitude, the closer to Earth orbit you are, and the more inside the atmosphere you are, the more energy your satellite or the engines propelling your satellites have to expend."

Elon Musk's focus on efficiency and effectiveness

  • Elon Musk, the founder of SpaceX, prioritizes efficiency, effectiveness, and execution. He is cautious about venturing into the low Earth orbit without a viable solution due to the challenges involved.

  • This highlights the difference between SpaceX and Blue Origin in terms of progress and capabilities.

"Elon is all about efficiency and effectiveness and execution... there's a reason he's not there because Elon is all about efficiency and effectiveness and execution, not to say that Blue Origin can't do it, but it's certainly a challenge and they're not close to where SpaceX it's so that would be my answer to that question."

Dividends in private equity investments

  • Investments in private equity, including SpaceX, typically do not pay dividends.

  • Some private companies may have dividend models, but it is rare.

"There are no dividends paid on these investments... in private equity... certainly not the case here."

Parking money until IPO

  • Currently, investors are essentially parking their money until SpaceX's IPO or another significant event occurs.

  • The absence of dividends is due to the ongoing capital raising efforts of these companies and their lack of net income.

"You are absolutely parking money until the IPO... in fact, that is not uncommon, in fact, that is very standard."

Access to material on SpaceX

  • BSB can provide detailed material on SpaceX as a company, including their past achievements, steadily rising valuation, and future timeline.

"I can certainly provide that [material on SpaceX]... right after this call if you would like."

Structure of the deal and involvement of BSV

  • Investors are purchasing a percentage ownership in an LLC that holds SpaceX shares.

  • At the time of SpaceX's IPO, the LLC will receive the shares, and participants in the private placement will have ownership rights.

  • BSV is heavily invested in the deal and prioritizes being closely associated with the cap table for maximum involvement.

"You are purchasing a percentage ownership in an LLC that has purchased the right to have SpaceX shares delivered to it at the time of IPO... our goal is to always be as close to the cap table in any company as possible."

"BSV will be heavily invested into this deal... as we are on all our deals... our skin is always in the game."

Lack of transferable employee shares

  • Most SpaceX employees hold Class C shares, which are non-transferable except to immediate family members.

  • Class A shares, which are transferable, are primarily owned by the executive team and are challenging to acquire.

"Most employees of SpaceX have what are Class C shares... it's very hard to get them to sell."

Wrap-up and additional questions

  • The call is being recorded and available to review later.

  • Participants are encouraged to reach out directly if they have any questions or comments.

"In the event that there's follow-up questions... feel free to reach out to me directly... we'll be able to answer any questions or comments you guys have."

Buying SpaceX Shares

  • Private Equity placements in SpaceX are often priced higher due to the multiple hands the shares go through before reaching investors, with each rung on the ladder having a markup. The presenter aims to get as close to the cap table as possible without being directly on it.

  • Being directly on the cap table of SpaceX is deemed impossible by those the presenter has spoken to. This opportunity is the closest one can get and is currently at a low valuation in the market.

"Um private Equity placements in SpaceX even the ones that are priced at 160 a share the reason those are priced at 160 a share is because they're changing so many hands it's going through so many rungs on the ladder before it gets to the investor..."

Selling Shares as a Member of the LLC

  • Members of the LLC are generally allowed to sell their shares if they find interested buyers. This allows them to liquidate their investment in case of life events or other reasons.

  • The presenter mentions an instance where they were approached by a SpaceX employee who wanted to sell part of their equity to invest in real estate. However, it turned out that the employee's shares could not be transferred according to SpaceX HR.

"That's not something that we'd be looking to necessarily do if someone has a life event for example and they want to liquidate their position in this investment we can certainly work with them to find somebody or have them themselves find somebody who would then take over that ownership in the LLC..."

Class A and Class C Shares

  • Class A and Class C shares in SpaceX have no difference in value. The only distinction between the classes is what can be done with the shares. Class A shares can be sold to third parties with SpaceX waiving its right of first refusal, while Class C shares cannot be transferred.

  • At the time of IPO, all shares will likely be converted to either common or preferred shares, making the distinction between Class A and Class C irrelevant in terms of value.

"No difference in value between Class A and Class C..."

SpaceX's Proven Track Record and Evaluation

  • SpaceX's launch failure does not significantly impact the company's evaluation because their valuation increased from $130 billion to $150 billion.

  • Unlike competitors like Blue Origin or Virgin, SpaceX consistently performs rocket launches and satellite launches every few weeks.

  • SpaceX's history of success and execution makes one launch failure inconsequential.

"SpaceX is literally doing launches and rocket launches and satellite launches every few weeks. They've done hundreds. SpaceX having one launch fail is like Michael Jordan shooting 68 instead of 70. It's just not over, you know. They have such a proven track record of excellence and delivery and execution."

Probability and Track Records in Investment

  • Despite the potential for unexpected events, in the investment space, decisions are based on probability and track records.

  • While anything can happen, it is crucial to consider the likelihood of success when evaluating investments.

"In the investment space, you have to go by probability and track records."

Requirements to Join the Deal

  • Anyone on the call can join the video.

  • Participants can either join the video or communicate through typing.

"If you're on this call, you can join the video."

Impact of Individual Company Events on SpaceX's Stock

  • Individual company events such as satellite imagery from Planet Labs and Ursa Major laying off workers or Virgin Orbit filing for bankruptcy do not impact SpaceX's stock.

  • These events are specific to the companies involved and do not reflect an industry-wide trend.

"It sounds like these are individual company events, and it doesn't sound like this was an industry-wide, no. Absolutely not. SpaceX is growing."

Timelines for Commitments and Funds Transfer

  • Verbal commitments are expected by the end of the weekend.

  • Signed paperwork should be completed by the middle of the following week.

  • Funds transfer should ideally occur by the end of the following week.

  • The timeline can be adjusted on a case-by-case basis for individuals who need additional time for fund arrangements.

"We would like the verbal commitments by the end of this weekend. We would like the signed paperwork by the middle of next week, and then we would like funds transferred over, if not by the end of next week, then definitely by the start of the following week."

Conclusion and Farewell

  • The call is concluded, and participants are thanked for their time.

  • A recording of the call will be available, and further questions are encouraged.

"Alright, guys. Thank you so much for spending the time. I really appreciate it. Any more questions, please throw it out on the chats. There will be a recording of this call for those that weren't here, and if there's any questions that come out of that, please don't hesitate to ask. We'll be happy to answer them. Appreciate it. Bye, everyone."

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