The $40 Billion Space Bet: Inside Vy Capital's Rise as a SpaceX Power Player

A relatively obscure venture capital firm has quietly amassed one of the most significant financial positions in the new space race. Recent disclosures reveal that Vy Capital holds a stake in SpaceX worth approximately $40 billion, representing about 3.4% of the company. This substantial holding places it ahead of renowned Silicon Valley giants like Sequoia Capital and Andreessen Horowitz, ranking it as the fifth-largest shareholder in the aerospace company.

A Conviction Investment Forged in Challenge

Vy Capital's journey with SpaceX began in 2016, during a testing period for the latter. At the time, SpaceX was valued around $15 billion and grappling with the aftermath of a Falcon 9 rocket launch failure.

It was at this juncture that John Hering, Vy Capital's lead partner, made a pivotal move: investing over $100 million into SpaceX. This commitment provided not only crucial capital but also a powerful vote of confidence. Today, with SpaceX's valuation hovering near $1.75 trillion, the returns on that early conviction are staggeringly evident.

More Than Money: A Deeply Integrated Strategic Ally

Vy Capital's role extends far beyond passive financial backing. Its deeply interwoven relationship with Elon Musk's ecosystem forms the core of its unique strategy.

  • Portfolio Synergy: The firm is also the largest external investor in Musk's The Boring Company and Neuralink.
  • Operational Involvement: Since 2019, John Hering has been involved in the early-stage build-out of SpaceX's Starlink subsidiary, assisting with key hires and financial modeling, and even holding a SpaceX employee badge at one point.
  • Continued Commitment: Vy Capital recently participated in a $3 billion funding round for The Boring Company, where Hering serves on the board.

This pattern of deep support was repeated during Musk's 2022 acquisition of Twitter, to which Vy Capital committed $700 million.

Lean Team, Outsized Returns

In stark contrast to its massive asset base, Vy Capital operates with a remarkably lean team. The entire firm comprises just a few dozen employees, with a core investment team of four individuals. Despite its small size, its performance has been extraordinary.

Since its founding in 2014, the firm has achieved a gross internal rate of return of 41%, distributing $4.6 billion in profits to its investors. Its assets under management have also skyrocketed, growing from $27 billion at the end of last year to $50 billion as of June. Notably, the firm closed its doors to new external investors last year, signaling intense focus on its existing portfolio.

The Road Ahead: A Trillion-Dollar Vision

Vy Capital holds an exceptionally bullish view of SpaceX's future. In communications with investors, the firm has projected that, if its thesis plays out, SpaceX could achieve a valuation exceeding $10 trillion within the next five to seven years. This audacious forecast underscores the monumental scale of its long-term bet.

From backing SpaceX during a crisis to embedding itself in its operations and projecting a future of almost unimaginable scale, Vy Capital's story illustrates an investment philosophy that transcends traditional venture capital—one built on profound trust, strategic alignment, and the pursuit of world-changing, long-term value.