China Military-Linked Investors Held Secret Pre-IPO Stakes in SpaceX
The Pentagon's main launch and spy-satellite contractor took foreign, military-linked capital while private, a national-security and ownership question now surfacing through court records.
The Pentagon's main launch and spy-satellite contractor took foreign, military-linked capital while it was private, a national-security and ownership question now surfacing through court records.
At least a dozen investors with addresses in mainland China, Hong Kong or Russia bought stakes in SpaceX between 2018 and 2021 through a U.S. middleman, Tomales Bay Capital, ProPublica reported, citing a court-unsealed investor list. One of them has ties to Chinese military contractors.
The stakes were small, from $800,000 to $40 million, bought through funds that packaged SpaceX stock for outside buyers. Tomales Bay is run by Iqbaljit Kahlon, long close to SpaceX's leadership; a 2021 pitch to a China-based investor promised quarterly business updates, visits to SpaceX and interviews with its chief financial officer, ProPublica wrote. SpaceX has let Chinese money in as long as it routed through the Cayman Islands or other offshore hubs, per earlier testimony in the same Delaware case.
One entity owned by David Su, co-founder of the Beijing venture firm MPCi, put $15 million into a SpaceX fund in 2020, records show. Su's firm has backed SpaceX's Chinese competitors, two of which the U.S. later sanctioned over the Wagner Group and, last month, over Iran's attacks on American forces. MPCi said Su received no nonpublic SpaceX information and described him as a Singapore citizen.
SpaceX builds spy satellites for the Pentagon and runs Starshield, its military satellite network, which is what makes the ownership question a defense matter. Foreign investment in U.S. military contractors is legal but heavily regulated. What worries screeners is access to information rather than control of the company, said Sarah Bauerle Danzman, a former State Department investment reviewer, who flagged whether China-based investors reached nonpublic detail on SpaceX technology or strategy.
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Subscribe Free →SpaceX barred China and Hong Kong investors from its record IPO last week, citing regulatory and compliance risks, as its valuation passed $2.7 trillion, up from $33.3 billion in 2019. That bar covers new public shares. The private stakes were already on the books, and surfaced only after the Delaware Supreme Court ruled against Tomales Bay in ProPublica's favor. Regulators have not said whether they will act on the foreign holdings in a Pentagon space prime.
Frequently Asked Questions
What did the court records reveal?
A court-unsealed investor list obtained by ProPublica shows at least a dozen investors with mainland China, Hong Kong or Russia addresses bought SpaceX stakes between 2018 and 2021 through U.S. middleman Tomales Bay Capital, with one tied to Chinese military contractors.
How large were the investments?
They ranged from $800,000 to $40 million, ProPublica reported. One entity owned by MPCi co-founder David Su put $15 million into a SpaceX fund in 2020; MPCi said Su received no nonpublic information and called him a Singapore citizen.
Why is this a national-security issue?
SpaceX builds spy satellites for the Pentagon and runs the Starshield military network. Foreign investment in U.S. military contractors is legal but heavily regulated; the concern, per former State Department screener Sarah Bauerle Danzman, is whether Chinese investors gained access to nonpublic technology or strategy.
How did the money get in?
Through funds run by Tomales Bay Capital that packaged SpaceX stock for outside buyers. Per earlier testimony in the same Delaware case, SpaceX allowed Chinese investment as long as it was routed through the Cayman Islands or other offshore hubs.
Didn't SpaceX block Chinese investors from its IPO?
Yes. SpaceX barred China and Hong Kong investors from its record IPO last week, citing regulatory and compliance risks. That bar covers new public shares; the private stakes were already on the books.
AI-generated summary, reviewed by an editor. More on our AI guidelines.
Marcus Schuler
Marcus Schuler edits BattlePolicy, a daily defense-technology brief connecting the companies and capabilities behind modern war to the contest among Europe, the US, Russia, and China.