North Carolina Treasurer Declines Direct SpaceX Investment, Prefers AI Bets Like OpenAI and Anthropic
Table of Contents
You might want to know
1. Why would a public pension fund avoid a high-profile IPO despite its market position?
2. How can a state treasury balance exposure to groundbreaking companies with the fiduciary duty to secure steady returns?
Main Topic
North Carolina State Treasurer Brad Briner recently explained his office's decision to forgo a direct private investment in SpaceX ahead of the company's anticipated initial public offering. Briner manages a sizable public pension portfolio—responsible for roughly $200 billion in assets that support teachers, firefighters, police officers and other public servants—and his remarks underline the tension between participating in headline-grabbing opportunities and protecting the fund's long-term, predictable returns.
At the heart of the treasurer's argument is valuation. SpaceX, the aerospace firm led by Elon Musk, was being priced at roughly $1.77 trillion (often rounded to about $1.8 trillion) as it prepared to sell more than half a billion shares. Briner characterized that level as potentially leaving limited upside for investors who must prioritize steady, reliable outcomes for retirees. His office has been explicit that while SpaceX represents "incredible technology" and remarkable entrepreneurial leadership, a very high entry price reduces the margin for future gains and increases downside risk for a public pension plan focused on predictable returns.
Rather than pursuing an early private stake in SpaceX, North Carolina's pension fund has allocated capital to leading artificial intelligence companies that Briner views as presenting a superior risk-reward profile. The state invested around $40 million in OpenAI and committed approximately $250 million to Anthropic earlier in the year. Briner noted that the Anthropic position has appreciated significantly and is now worth more than $600 million, an outcome he cited as evidence that the fund can achieve meaningful gains from selective private investments when pricing and opportunity align.
This approach reflects a broader investment philosophy common among fiduciaries of large public funds: seek a balance between participation in transformative sectors and a disciplined focus on valuation and potential returns. For a pension fund tasked with generating a reliable, often single-digit percentage return to meet long-term liabilities, paying an elevated price for an asset that already reflects substantial optimism can be difficult to justify. That perspective helps explain why Briner described SpaceX as "fully priced" for the purposes of his fund's mandate.
Still, Briner did not close the door on eventually benefiting from SpaceX's public listing. His team expects the pension plan to gain indirect exposure via broad market index holdings once the stock begins trading publicly. That route offers a less concentrated and more diversified way to capture some of the company’s future upside without assuming the valuation risk that comes with a large private allocation. It also keeps the pension plan aligned with a prudent risk management posture: participate in public markets where appropriate while reserving private allocations for opportunities that meet stricter price and return thresholds.
The treasurer’s stance illuminates the diverse views within the institutional investor community leading into one of the largest expected IPOs in history. Many asset managers regard SpaceX as a unique company with strong competitive positions in rocket launches and a growing constellation of satellite internet assets. Others, particularly those responsible for public pensions and endowments with long-dated liabilities, question whether current pricing leaves enough room for their return targets and for margin of safety. These differing assessments are shaped by investment horizons, liquidity needs, regulatory constraints, and fiduciary duties.
Briner’s emphasis on discipline and valuation also highlights why some large funds will selectively back early-stage or private ventures in areas they consider mispriced or where they perceive asymmetric upside. The Anthropic investment is a clear example: the treasury saw an opening it judged attractive and moved decisively, producing outcomes that validate, in Briner’s view, the combination of selective private bets and broader public market exposures.
In weighing whether to take on direct, early stakes in high-profile private companies, public funds consider multiple variables: current valuation relative to projected cash flows and growth, the likelihood of downside protection, the impact on portfolio diversification, illiquidity premium expectations, and governance or control features. For North Carolina's plan, the conclusion was that SpaceX's private-market pricing did not sufficiently compensate for the risks and opportunity costs, while opportunities in AI were priced more favorably and offered a clearer route to exceed the fund's return objectives.
Ultimately, this episode underscores how institutional investors apply fiduciary principles to contemporary technological winners. While headlines focus on the marquee names and eye-popping valuations, trustees and investment officers must translate those narratives into actionable portfolio decisions that align with the financial needs of beneficiaries—often favoring restraint and selective participation over headline chasing.
Key Insights Table
| Aspect | Description |
|---|---|
| Valuation Concern | SpaceX’s private-market valuation (~$1.77–1.8 trillion) was judged too high for a direct pension allocation. |
| Alternative Allocations | North Carolina invested in AI firms such as OpenAI ($40M) and Anthropic ($250M), which appreciated substantially. |
| Risk-Return Focus | The fund prioritizes steady, predictable returns for retirees rather than concentrated bets at high private valuations. |
| Public Market Exposure | Treasury expects indirect exposure to SpaceX via index funds once the company lists publicly. |
Afterwards...
Looking forward, the dialogue between valuation discipline and the desire to participate in transformative companies will continue to shape institutional allocations. As more private companies move toward public listings, pension funds and other long-term investors will wrestle with when to commit capital directly and when to rely on broader-market exposures. The North Carolina example suggests a blended strategy: pursue targeted private investments where pricing and potential payoffs meet fiduciary standards, while using public indices to capture market-wide gains for extremely high-priced, broadly held companies. This balanced approach preserves capital for beneficiaries while leaving room to capitalize on future mispricings or technological breakthroughs.
For trustees and investment committees, the central takeaway is the importance of clearly articulated valuation thresholds, diversified exposure plans, and the willingness to forgo headline-making deals when they do not align with long-term return requirements. That discipline, demonstrated in this case, is likely to remain a defining feature of prudent institutional investing as market- and technology-driven opportunities continue to evolve.
