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.