Ram Rupireddy could hardly believe his luck in 2020 when his friend told him about a New Jersey firm pitching investment opportunities in SpaceX and other buzzy privately held companies. Rupireddy lives in Ashburn, Va., with his wife and two kids and was earning a reliable income as a data engineer at a healthcare company. The investment firm, Late Stage Management, wasn't selling actual shares, but stakes in vehicles that it said held them. Known as special-purpose vehicles, the funds hold shares in private companies either directly or indirectly.

Rupireddy's friend introduced him to a sales manager at Late Stage, Jeremy Barish. They spoke on the phone but mostly messaged back and forth on WhatsApp. In November 2020, Rupireddy messaged Barish about how he had missed out on a few big IPOs recently and how he'd love to participate in buying stakes in Impossible Foods, SoFi and SpaceX. Barish said all three were available and sent over paperwork. Rupireddy wired over money before the end of the year, including $17,250 to take part in a fund that held shares in Elon Musk's SpaceX, according to documents reviewed by The Wall Street Journal. At the time, he estimated the rocket maker was valued at $58 billion.