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Elon Musk backer Vy Capital closes to outside investors after windfall

Secretive tech investment group has racked up gains after backing companies such as SpaceX and xAI

A secretive technology investment group that is a top backer of Elon Musk’s companies will close to external investors, after racking up such big gains that it is no longer dependent on outside financing.

Vy Capital, which has a four-person investment team and little public profile, has emerged as a major financier for Musk’s groups, including his rocket company SpaceX and artificial intelligence company xAI.

According to people familiar with the matter, Vy notified its external investors this month that it would not raise further outside money.

The group plans to continue managing its current portfolio and investing its own capital, the people added.

Vy, which is led by John Hering and Alexander Tamas, has about $15bn of assets under management and has generated about 28 per cent annual returns over the past decade, after being co-founded in 2014, one of the people said.

The group has for years backed SpaceX, including as a lead investor, first investing at a valuation of $15bn. The rocket company is now set to be valued at $400bn, more than doubling the figure from less than two years ago.

Vy also has been a major backer of artificial intelligence group xAI, which is targeting a valuation of up to $200bn, a 10-fold increase from early last year.

One person with knowledge of Vy’s investments said it is the largest external shareholder in Musk’s brain implant group Neuralink and tunnelling company BoringCo.

Neuralink’s valuation has almost tripled in the past two years to $9bn, according to data provider PitchBook.

Vy has become a vital player in financing Musk’s dealmaking. In 2022, the group committed $700mn to Musk’s bid for Twitter — which he has since renamed X — becoming one of the biggest backers of the billionaire’s $44bn takeover of the platform.

The following year, Pablo Mendoza, then managing director at Vy, was part of the so-called “transition team” Musk brought in to Twitter to help him slash costs and wrestle the platform’s finances under control.

Mendoza later became head of finance for xAI, which has since acquired X.

Hering and Tamas expect to continue to work closely with the billionaire entrepreneur after closing to outside funds, the people said.

Vy has raised three funds of less than $1bn each, one person said, with a total operations team of about 20 people, including offices across California and London. Its website is a single page listing only the firm’s name, motto, locations and email address.

Alongside backing Musk’s companies, Vy has also invested in groups including social platform Reddit, Indian food delivery company Zomato and the financial technology group Upgrade.

It is set to make hundreds of millions of dollars in profit when the home services firm Urban Company holds an initial public offering in India.

Vy has also invested in the US AI group Cerebras, which has expressed an “aspiration” to IPO this year, and has been an early backer of the $5bn cyber insurance company Coalition, where Hering is a co-founder.

Hering previously co-founded the cyber security company Lookout, while Tamas worked at Goldman Sachs and as a close associate of Yuri Milner, the billionaire founder of DST Global, where he led deals with companies including Facebook and Airbnb.

The son of Jared Birchall, a top Musk aide, was a summer analyst in recent years at Vy, underscoring the close links between the Tesla chief and the firm.

Vy declined to comment.

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High-end second-hand platforms are drawing buyers and vendors with tailored services, personality-led shopping experiences and a curated edit

Up until a few years ago, Anabelle Anthony shopped on peer-to-peer resale platforms such as eBay and Vestiaire Collective for vintage Yves Saint Laurent and Dior — but more recently she has switched to consignment sites that sell a vetted edit of products, including Paris-based ReSee. “I️ have a hard time trusting private sellers found on larger platforms,” says the 24-year-old American development manager for a modelling agency. 

Anthony is one of many second-hand shoppers who are feeling the pull of platforms that may have fewer products and higher prices than larger marketplaces, but offer personal interactions, a community feeling and polished websites with inspirational images.

“It’s the difference between wandering through a warehouse and being handed a tightly edited rack backstage at a show,” says Domi Perek, 30, a Berlin-based art director who browses second-hand platforms on a weekly basis for vintage Jil Sander, Phoebe Philo’s Céline and early Helmut Lang.

ReSee was founded in 2013, shortly after Vestiaire Collective and The RealReal. The former pioneered selling second-hand luxury peer-to-peer online, while the latter introduced consignment, aiming to reassure clients of products’ authenticity and cleanliness. Both platforms have raised hundreds of millions of venture capital, boast high sales volumes ($600mn for The RealReal and €187mn for Vestiaire Collective in 2024) and have struggled with counterfeit issues and profitability. (Vestiaire expects to become profitable this year, while The RealReal, which went public in 2019, reached it in 2023).

ReSee came to market with a more tailored approach. “We wanted to serve that luxury consumer who is not necessarily looking for second-hand, but she is looking for great moments in fashion,” says Sofia Bernardin, a former American Vogue editor who co-founded the platform with Sabrina Marshall, previously a fashion director at Self Service magazine. “Our clients want to shop a point of view. We make sure that each piece is relevant with what’s going on in fashion today,” adds Marshall.

They launched the platform with 250 vintage Saint Laurent pieces belonging to a private collection. Today, finds on the site include a €6,280 Dior couture dress from 2018 and €14,460 Tom Ford for Gucci gown from 2004, as well as more accessible pieces such as a €244 wrap skirt from Céline. Each item is authenticated by ReSee’s in-house team of three, sanitised, repaired if needed, and shot on a model. 

The company, which its founders say has been turning a profit since the beginning, takes a 40 per cent commission on ready-to-wear. In comparison, Vestiaire Collective has a 10 per cent selling fee for items priced between £100 and £20,000 in the UK. But ReSee’s sellers are willing to pay for the level of service they receive. “We go to her, we clean up her closets, it’s an experience,” says Bernardin. In 2023, the brand said it was targeting €25mn in revenue by 2025.

The global resale market has enjoyed double-digit growth for the past four years, reaching $204.7bn in 2024, according to Global Data, and competition has boomed. It’s a market where cautionary tales of going too big too fast abound, with the recent collapse of businesses including UK-based Luxe Collective and Cudoni, both of which sold second-hand luxury apparel and accessories.

But as the market expands, new founders are carving out niches with specialised offerings and personality-led shopping experiences. They are also launching services to ease the labour of buying and selling online. These founders are doing so while advocating slow growth and keeping a firm eye on their bottom line.

Hanushka Toni, who founded Sellier in 2019 with a focus on luxury handbags, attributes the early profitability of her business to two cornerstones: its commissioning structure and its high average order value, which is between £2,500 and £3,500 per transaction. Sellier takes a fee of between 50 per cent for products priced up to £1,250, and 20 per cent for ultra premium Hermès bags.

“We are probably one of the most expensive resale solutions in the market,” says Toni. “But our sellers are more than prepared to pay that because the sell-through is so fast and we are a very high-touch business. All they need to do is make up their mind to sell. We collect the product, do everything from A to Z, and then get them paid.” 

Sellier has stores in London and Monaco, as well as seven physical locations across the UK. They allow customers to have a direct point of contact, but also store products, saving on the cost of managing a warehouse. “Our buyers are not people looking to save money, they are people who want the hottest item and might have missed out on it [in the primary market],” says Toni, adding that turnover was upwards of £20mn last year, up 40 per cent on 2023. “When you are doing transactions of our nature, customers want to know that they are not shopping with someone who is just in the ether.”

This personal connection is at the core of The Hosta, a reseller of vintage handbags and watches founded by Danni Dance, a former bag and accessories developer for Nanushka, Cos and Hunter, in 2020. Dance personally replies to customers’ questions, provides extra photos and videos of her items, and even models them herself to show proportions and styling tips.

“I really felt like I got to know Danni by speaking to her through Instagram,” says Roya Farrokhian, associate commercial director of fashion at Condé Nast in London, who has been using the platform for four years. “She almost acts like a sales associate.”

Dance has found her niche in handbags from brands including Bottega Veneta, Loewe, Fendi and Louis Vuitton, usually priced between £500 and £3,000. “It’s not trend-led, it’s a bag that we know will last season after season. The quality has to be there, the leather has to be right,” says Dance, who takes a 30 per cent commission on anything below £3,000. Her clients include collectors, stylists and designers but also “people who maybe don’t have the budget to buy a £4,000 new Bottega [Veneta] bag”, she adds.

The business is profitable and Dance believes it will continue to grow. “More and more people will turn to vintage as prices for [new] products increase and quality declines,” she says.

Melanie Milham, who founded Curate & Rotate in 2020, is also similarly catering to clients on a budget with pieces from contemporary labels such as Nanushka, Toteme, Tibi and House of Dagmar, priced between £30 and £650. According to Milham — who takes a 50 per cent commission — much of the draw of her platform lies in the way pieces are shot and styled, creating what she calls the “Curate & Rotate look”.

“People trust us and enjoy seeing pieces come to life,” she says. Curate & Rotate is also in the black, with revenue in the six figures, and Milham is planning to open a physical store in Brighton next year.

For others the curation is not a question of brand, product or style, but of source and community. When Theo El-Kattan and Henry McNeill-Njoku launched Known Source in 2022, they wanted to “curate the best sellers in the industry and bring them into one place”, says El-Kattan, who had grown frustrated from scrolling “hours and hours” on Grailed or Depop.

Their 37 sellers work across streetwear, archive fashion and luxury, bringing a very engaged audience of Gen Z and even Gen Alpha shoppers. Known Source takes a 7.5 per cent commission on sales and provides a team of creative directors and editors for shoots, organises pop-ups, events and exhibitions for sellers and buyers, and offers access to a store and workspace in a five-storey townhouse in Mayfair that they lease at a discount as part of a council programme for emerging businesses.

Hanna Samson, founder of Haut Corp, a vintage store in Hackney, says Known Source allows her to reach a broader audience. “So maybe a streetwear guy also buys a Balenciaga top from me for his girlfriend,” she explains. El-Kattan expects the platform, which has received shy of £300,000 from a mix of angel investors, institutions, grants and competitions and has annual turnover in the six figures, to reach profitability in the next two quarters and plans to expand the seller networks into the high hundreds. 

Won’t that turn Known Source into a crowded space, just like the ones he was frustrated by? “Never, because you are always going to have the right styles for you from a trusted source,” he says.