SpaceX's push for a Nasdaq listing is poised to deliver returns of dozens of times the original investment to U.S. university endowments that backed the company more than a decade ago.
Washington University in St. Louis invested $50 million in SpaceX about 10 years ago, according to Bloomberg on Friday.
The stake is now worth more than 10% of the university's $17 billion in total assets, representing a more than 30-fold increase.
With SpaceX's valuation discussed at up to $2 trillion, a successful listing could become one of the most notable investment returns in the history of university endowments.
"We have maintained a strategy of finding promising partners and deploying additional capital when attractive opportunities arise," Scott Wilson, chief investment officer at Washington University, said in an interview with Bloomberg. "About 40% of the entire endowment is managed through co-investments with private equity and venture capital firms."
Unlike Harvard and Yale, which spread their investments across hundreds of funds, Washington University concentrates capital with a small number of managers and repeatedly follows on with promising companies.
Washington University is not alone. Vanderbilt University also participated in early SpaceX investments through a venture capital network it built over more than a decade and now holds a stake worth approximately $171 million.
U.S. university endowments are structurally suited to such long-term venture investments. Because they are designed to operate for decades or centuries, they face relatively less pressure to convert holdings into cash in the short term and can allocate more to private companies.
Yale University earned more than $84 million from LinkedIn's listing in 2011, while the University of Michigan's $20 million early investment in OpenAI had grown to $2 billion as of 2023.
Risks remain, however. Private equity and venture capital assets can take years to convert into cash, and losses are slow to recover during market downturns.
Taxes are another variable. The U.S. Congress recently raised the tax rate on investment income at large private university endowments from 1.4% to as much as 8%, meaning that even massive gains from major IPOs such as SpaceX could leave universities with less than expected.
