Want to Invest in SpaceX Before Its IPO? Here's How.

Following a monster performance in 2021, the initial public offering (IPO) market has cooled down over the last few years. But thanks to soaring valuations among private companies -- primarily artificial intelligence (AI) start-ups -- several unicorns are considering making their public market debuts this year.

Image source: Securities and Exchange Commission (SEC).

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In late January, Elon Musk's AI start-up xAI completed a $1.25 trillion merger with SpaceX. Following the deal, discussions are swirling around a potential IPO of the combined business. A SpaceX IPO will almost undoubtedly come with enormous investor demand and exclusivity -- preventing retail investors from enjoying the action.

But guess what? You don't need to wait for SpaceX to hit the public exchanges. Believe it or not, anyone can own a piece of Musk's trillion-dollar empire right now for just a few hundred bucks. Here's how.

What is the best way to invest in SpaceX?

To date, SpaceX has raised $11.9 billion of funding. While much of this has come from venture capital and private equity firms, a number of corporations have also invested in the company.

Perhaps the most recognizable brand on SpaceX's investor roster is Alphabet's (NASDAQ: GOOGL) (NASDAQ: GOOG) Google. The internet giant has been an investor in SpaceX since 2015 -- participating in a $1 billion funding round at the time. If you're a retail investor, I think investing in Google parent Alphabet is both the easiest and best way to gain exposure to SpaceX.

Alphabet is an incredibly diversified company whose ecosystem spans advertising, consumer electronics, autonomous driving, cloud computing, artificial intelligence (AI), and, of course, space exploration via its ownership stakes in SpaceX and AST SpaceMobile.

Image source: Getty Images.

What ETFs own SpaceX?

Exchange-traded funds (ETFs) are baskets of stocks that investors can buy to gain passive exposure to market themes and industry sectors. Some ETFs carry more complex structures -- holding equity in private companies in addition to public stocks.

Some ETFs that hold positions in SpaceX include Cathie Wood's ARK Venture Fund and the XOVR ETF. In addition, the KraneShares Artificial Intelligence and Technology ETF (NASDAQ: AGIX) now owns a slice of SpaceX through its prior investment in xAI.

Bear in mind that ETFs come attached to management fees. Moreover, these funds have loads of holdings -- meaning you won't be purchasing a stake in SpaceX in isolation.

Can you buy SpaceX in secondary markets?

If you're an accredited investor, you should have access to secondary market platforms like Forge Global, EquityZen, or Hiive. These platforms facilitate transactions in the secondary market (off public exchanges) for those willing to assume the added risk of investing in a venture-backed company.

Here's the thing smart investors need to know: Oftentimes, investing through secondary market platforms does not guarantee that you acquire a direct stake in the stock you're looking for. Rather, it's more likely that you're buying a piece of a special purpose vehicle (SPV) or a company that owns equity in SpaceX.

The bottom line: Investing in SpaceX is both easy and hard

At the end of the day, it's incredibly difficult to buy shares in SpaceX directly -- regardless of your income or net worth. That said, there are loads of easy, credible ways to invest in the broader space theme, all while owning indirect, passive exposure to SpaceX.

Those looking to buy SpaceX stock before the IPO may want to consider a more diversified (and less expensive) approach through a combination of stocks and ETFs.

Adam Spatacco has positions in Alphabet. The Motley Fool has positions in and recommends AST SpaceMobile and Alphabet. The Motley Fool has a disclosure policy.