Wealthy Chinese investors are quietly pouring tens of millions of dollars into private companies managed by Elon Musk using arrangements owned by Elon Musk, according to asset managers and investors involved in the transaction.
Musk has been appointed as a key figure in US President Donald Trump’s willingness to remake the US government, so the China-based asset manager is fostering the pair’s relationship as a temptation to raise capital from a wealthy China. This money flows into Musk’s private ventures, including Xai, Neuralink and SpaceX, the world’s most valuable private companies.
The investment is located through an opaque structure known as a special purpose vehicle with the advantage of hiding the investor’s identity, avoiding the ire of U.S. authorities and businesses wary of China’s capital during the lowest point in relations between the two countries.
The asset manager behind the transaction tells investors that the entity is specifically designed to avoid disclosure.
The use of vehicles for special purposes in fundraising is common and no arrangements are illegal. Still, it raises concerns about the potential for excessive influence and conflicts of interest when Musk has unprecedented involvement in US policy, politics and business.
“Can someone in the mask position have so many ties with China, and still be a good person to reform the US government?” said Derek Sacisors, a senior fellow at the American Enterprise Institute. The influx of Chinese money into the mask’s business empire adds to this photo that he is more interested in his reputation and Chinese brand than in America’s profits.”
The opaque nature of the structure makes it difficult to assess the full scale of the Chinese capital, which is influx of mask private ventures. However, the three Chinese support assets managers told the Financial Times that they have sold more than $30 million in stake in SpaceX, Xai and Neuralink over the past two years.
According to Pitchbook, SpaceX has raised over $10 billion from investors around the world since its founding in 2002.
According to those involved in the transaction, the inflow of masks into the business empire of China is primarily profit-driven and has little to do with technology transfer or impact on public policy.
With the domestic economy slowing, wealthy Chinese people are looking for investment opportunities overseas.
However, this structure means that Chinese investors are limited if there is limited information about the company’s financial and performance, unlike the details shared with major investors.
Musk enjoys a warm relationship with Beijing, but it has been difficult for the company to invest directly from China, the financial advisor said. The Beijing Security Hawks have criticized SpaceX for its ties with the US military.
“We are committed to providing a range of financial advisory groups with a focus on the world’s largest financial advisory group,” said Kevin Chen, chief economist at Horizon Financial, a New York-based financial advisory group. “Chinese money is not welcome in many areas.”
Representatives from Musk, SpaceX, Xai and Neuralink did not respond to repeated requests for comments.
On a recent Wednesday afternoon, hundreds of Chinese investors joined the webinar to hear representatives from Eastern China’s asset manager Homaer Financial and pitched the opportunity to invest in SpaceX for just $200,000 per person.
Homaer officials said they expect SpaceX’s rating to triple almost triple to 1.1TN within three years. This is thanks to “comprehensive” support from the US government and the military that continued to procure the space technology companies, even in “times of pain.”
The wealthy Chinese people began funding private mask ventures in late 2019. The founder of Tesla began construction of an electric vehicle factory in Shanghai in 2019, taking advantage of the country’s efficient, low-cost supply chain.
Early investments paid off. Homaer said in an October social media post that a group of clients invested in SpaceX in June 2018 and earned a 530% return, cashing out six years later.
Homaer investors confirmed the figures and added that he regrets not investing any further. “I knew masks were good businessmen,” he said. “But I didn’t expect him to be that successful within such a short time frame.”
Over the past two years, Homaer has launched three funds to invest in SpaceX and has managed to achieve its target of raising capital within weeks, said someone with knowledge of the matter.
When Beijing imposed restrictions on private companies, it called for the cancellation of Jack Ma’s Ali Group IPO and the ride group Didi Global to register with the US, the value of the mask venture continued to grow.
“I have a more faith in Musk than entrepreneurs from Chinese startups who are struggling to deal with an increasingly state-controlled economy,” said an investor who bought shares on SpaceX through Homaer last year.
Some Chinese people pay the price to openly buy shares in mask ventures. Chinese company Leo Group made the headline in 2021 when it announced plans to invest $50 million in SpaceX through California-based private equity fund Tomales Bay Capital. Les less than a week later, Leo’s US partner cancelled the deal, citing SpaceX’s discomfort after revealing its Chinese stock public offering, according to the subsequent legal battle between the two companies.
In response, the Chinese are turning to special city vehicles. Asset Managers pool investors’ funds to Cayman Islands Registered Entities. Cayman Islands registered entities invest in US-based funds managed by Western Private Equity Firms, an already existing investor in mask ventures.
The existence of Chinese funds is not visible in the public records of their holdings.
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A person close to Homaer said he asked his US partner if the company had accepted Chinese money. Typically, this condition also requires that US partners settle investments in extreme scenarios such as military conflicts between the two countries.
“The risk exists because we don’t know how bad the relationship between the US and China will be in the coming years,” the person said.
Uncertainty has not stopped wealthy Chinese people from making deals. Beijing’s strict capital management has limited Musk’s Chinese investors to those with foreign bank accounts, but some wealth managers have found options to overcome the barriers.
“China is facing an oversupply of capital and a shortage of high-quality projects,” said the investment manager in New York, which said it was trying to raise capital from China for such investments. “That’s where we fit.”
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