One Possible Explanation for Conflicting Accounts of SpaceX Fundraising

Yesterday, on-line media picked up and repeated again and again a story posted on Techcrunch.com claiming that SpaceX is seeking to raise capital on the secondary market. Just for reference, Investopedia defines secondary markets thusly:

“A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The national exchanges – such as the New York Stock Exchange and the NASDAQ are secondary markets.”

The key takeaway from the headline was that according to the story’s undisclosed source, SpaceX’s implied valuation could be around $10 billion. Interesting for sure, but very speculative until there is an actual IPO, and that does not look to be coming anytime soon.  The basics of the story itself, that SpaceX is seeking roughly $200 million in outside investment, were subsequently denied by SpaceX spokesperson John Taylor saying “SpaceX is not currently raising any funding nor has any external valuation of the magnitude you reported been done.”

Techcrunch is sticking to the story however, and says its has gone back to one of its sources for confirmation. There may be a very straight forward explanation.

What the original story, (and most of the retreads) fails to mention is why SpaceX may be interested in what its opportunities are, even if it is not actively shopping at the moment. That is the upcoming NASA announcement regarding its Commercial Crew program. One of the guidelines under which NASA will base its decision regards the amount of capital each of the three providers, Boeing, Sierra Nevada and SpaceX can prove they have the capacity to commit to the project.

For Boeing, financial capacity is not a problem, even if the will sometimes appears to be lacking.  Sierra Nevada might initially appear to be the weak link in terms of capital available, but participation by Lockheed Martin in building the vehicle itself,  and in providing a scheduled 2016 test launch via the ULA Atlas V, the funding for which has not been disclosed, suggests that the Dream Chaser may have more backing than some would otherwise think.

Clearly, SpaceX has the backing of founder and chief designer Elon Musk,  whose ownership stake in Tesla is driving his net worth higher than a Falcon 9 could at the moment.  Still though, in putting forward the strongest possible proposal to keep it in the lead against the Marianas Trench deep pockets of the nation’s two largest defense contractors, the extra margin and vote of confidence by outside investors might be useful. On the other hand, if it is not a winner when the announcement finally comes down, the need never existed in the first place.

For the moment, both sides may be right.