The Secret Dubai Fund Backing Elon Musk and Amassing Billions in SpaceX
A profile by the Financial Times reveals that Dubai-based Vy Capital, founded by Alexander Tamas and Jon Herring, holds a 3.4% stake in SpaceX valued at $40 billion.
A German investment manager working with a Russian billionaire, based in the UK and managing a massive fund out of Dubai, has emerged as one of the biggest and most secretive winners of SpaceX's rise, according to a Financial Times profile published during the holiday.
The investor, Alexander Tamas, founded Vy Capital in Dubai. Alongside his American partner, Jon Herring, the two became Elon Musk's premier bankers. Their fund has repeatedly shown unwavering loyalty to Musk and his portfolio companies, investing heavily even during difficult times and amassing holdings worth billions of dollars. Estimates suggest that Vy Capital's stake in SpaceX stands at 3.4% of the company's shares—surpassing top-tier funds such as Sequoia Capital and Andreessen Horowitz—and values the Dubai-based fund's holdings at $40 billion. This makes it the fifth-largest shareholder in Musk's aerospace enterprise.
Vy Capital, named after the physical index for vertical acceleration, was the largest external investor in the latest funding round of Musk's tunneling firm, The Boring Company, which raised $3 billion at a valuation of $23 billion. The fund also invests in Musk's brain-implant startup, Neuralink, and provided Musk with $700 million to acquire Twitter nearly four years ago.
The fund's investments in SpaceX likely began during its early years of operation and continued through the company's most challenging periods. In 2016, shortly after the failure of a Falcon 9 rocket launch, the fund invested $100 million. Starting in 2019, Tamas and Herring dedicated more time than any average investor to the Starlink internet satellite business, one of SpaceX's key operations, assisting in recruiting personnel and building sustainable business models. Herring even held a SpaceX employee badge and currently serves as a director at The Boring Company. Another fund investment manager, Pablo Mendoza, eventually transitioned to the role of chief financial officer at xAI, Musk's artificial intelligence company.
Tamas founded the fund after previously serving as a senior investment manager at Goldman Sachs. He met Musk and his associates while working at DST Global, the investment firm founded by Russian-American billionaire Yuri Milner, one of Facebook's earliest major investors. At DST, Tamas—already a senior partner—managed investments in Airbnb, Spotify, Twitter, and Chinese companies such as Alibaba, JD.com, and Xiaomi.
Tamas is also the brother of German politician Joana Cotar, a former member of parliament for the conservative CDU party, later for the right-wing AfD party (which also received encouragement from Musk), and since the Russian invasion of Ukraine, she has been serving as an independent member of parliament. Tamas's partner, Jon Herring, was a co-founder of cybersecurity firm Lookout and digital insurance company Coalition, joining Tamas at Vy Capital after investing a large portion of his wealth into the fund.
"SpaceX will be the most valuable company on Earth"
Since late last year, the fund's total assets under management (AUM) surged from $27 billion to $50 billion as of the end of June, according to an email sent to investors and revealed by the Financial Times. "We steadfastly believe that Elon Musk is the greatest engineer-entrepreneur in history," Tamas and Herring wrote in an email to their private investors. "We believe SpaceX will be the most valuable company on Earth, and if our plans materialize, it will reach a valuation of over $10 trillion in the next 5 to 7 years."
The fund claims that its internal rate of return (IRR)—representing paper profits on investments—stands at 41% across all three active Vy Capital funds since 2014. To date, the fund has distributed $4.6 billion to its investors, a figure expected to rise significantly in the coming year, according to its executives. The IRR of the third fund has doubled since its launch two years ago, boasting a paper profit of nearly 60%.
Despite its massive asset scale, the fund employs only a few dozen workers and a small investment team—not surprising given that most of its investments follow Musk's companies. However, the fund also maintains investments elsewhere, including a $500 million stake in chipmaker Cerebras, one of the largest semiconductor IPOs of the past year, alongside holdings in companies such as Reddit, Indian food delivery firm Zomato, and home services platform Urban Company.
Operating through a mysterious website where mystery outweighs transparency, the fund rarely courts media exposure and has successfully maintained a low profile despite being a major shareholder in a company behind one of the largest market valuations in history.
