A businessman with ties to Chinese military contractors was among the overseas investors who acquired stakes in SpaceX while it was still a private company, according to records obtained by ProPublica. The new details come from a private investor list that sheds light on a particularly sensitive issue for Elon Musk's rocket company: which people in countries like China bought into the company, and how.
SpaceX built its business largely on sensitive U.S. government contracts, including making spy satellites for the Pentagon. While there is no outright ban on Chinese investment in U.S. military contractors, such investments are heavily regulated. In a sign of the sensitivity surrounding this issue, SpaceX barred investors from China and Hong Kong from buying shares in its initial public offering last week due to "regulatory and compliance risks," Bloomberg reported.
The new records detail at least a dozen investors with addresses in mainland China, Hong Kong or Russia who acquired stakes through a middleman firm called Tomales Bay Capital. The investments ranged from $800,000 to $40 million and were made between 2018 and 2021. One investment came from an entity owned by David Su, co-founder of the Beijing venture capital firm MPCi, which invested $15 million in a SpaceX fund in 2020.
What the Right Is Saying
Conservative defenders of SpaceX point out that all identified investments appear to be relatively small and that there is no evidence of improper conduct by any investor. Ryan Stonerock, a lawyer for Tomales Bay Capital, said in a statement: "The vast majority, if not all, of the investors included on the unsealed Tomales Bay investor list are not citizens of any foreign adversary, including Russia or China, and certainly none of them are agents of Russia or China."
Some Republican voices argue that the investments actually demonstrate confidence in the U.S. space industry from international markets. They note that SpaceX's IPO was the largest ever and created significant wealth for American shareholders. Supporters also highlight Musk's business dealings with China through Tesla, arguing this shows he has extensive experience navigating regulatory complexities.
National security hawks within conservative circles have expressed concern about Chinese investment in sensitive sectors but note that existing regulations did not prohibit these transactions. They argue for stronger screening mechanisms going forward while acknowledging the difficulty of restricting investment in publicly available funds.
MPCi said in a statement that Su "has not received any nonpublic information of SpaceX." The firm described Su as "a Singapore citizen who resides in Singapore." Tomales Bay Capital stated it has "not provided any non-public, sensitive information regarding SpaceX to investors" and that its investors are passive limited partners.
What the Left Is Saying
Progressive critics and national security advocates argue that the investments raise serious concerns about foreign access to sensitive U.S. space technology. "If an investor has conflicts of interests with other companies in China — if they could feed that information to competitors — it could be a national security concern," said Sarah Bauerle Danzman, an Indiana University professor who previously worked for the State Department scrutinizing foreign investments.
Democratic lawmakers have long pushed for stricter oversight of foreign investment in strategic industries. The U.S. government alleges that China has a strategy of using investments in sensitive sectors for espionage and to gain access to cutting-edge technology. Some Democratic legislators have called for enhanced screening of investors in defense-related companies, arguing that the current system allows potential adversaries to acquire stakes without sufficient scrutiny.
Civil liberties advocates note that SpaceX's decision to bar Chinese and Hong Kong investors from its IPO suggests the company itself recognized the regulatory risks involved. They argue this admission underscores the need for stronger disclosure requirements before companies with significant government contracts can go public.
What the Numbers Show
The ProPublica investigation identified at least 12 investors with addresses in mainland China, Hong Kong or Russia through Tomales Bay Capital. Investment amounts ranged from $800,000 to $40 million. The largest single investment mentioned was David Su's $15 million stake in a SpaceX fund in 2020.
SpaceX's IPO last week was the largest ever, reportedly making Musk the world's first trillionaire. The company has secured billions of dollars in government contracts, including classified work for intelligence agencies. Tomales Bay Capital facilitated investments between 2018 and 2021, according to the investor list reviewed by ProPublica.
MPCi's portfolio includes satellite companies that were sanctioned by the U.S. government for allegedly assisting the Wagner Group and, more recently, for allegedly helping Iran attack U.S. military forces. The State Department's Bureau of Industry and Security oversees export controls and investment screening in sensitive sectors.
The Bottom Line
The revelations highlight a gap in oversight of foreign investment in companies that hold government contracts for sensitive technologies. SpaceX's decision to exclude Chinese investors from its IPO suggests the company anticipated regulatory complications, even as questions remain about stakes acquired while it was still private.
There is no evidence that any investor obtained nonpublic information or acted improperly. The key question from regulators will be whether China-based investors gained access to knowledge about SpaceX's technology or strategies through their investment positions. Experts say this case could prompt renewed scrutiny of the mechanisms used to facilitate foreign investment in U.S. defense contractors.
SpaceX did not respond to requests for comment on this story.