Raising $44 billion (€40 billion at current exchange rates) was not easy for Elon Musk in October 2022. The tycoon managed to raise three-quarters of this money from several investors who believed in his idea of building a “social network for everything.” Although it was already known that several heavyweights in Musk’s circle had bet on the ambitious operation, the detailed list with all the names remained hidden. Until this week. A federal judge in California ordered the publication of said list on Tuesday. In the court document, to which the Washington Post has had accessyou can find a mix of Silicon Valley investors, venture capital funds, traditional investors and some eye-catching figures such as hip hop musician Sean Diddy Combs.
Two of the people who handed the Space X founder a check were Marc Andreessen and Ben Horowitz, directors of one of the best-known and most influential venture capital firms in Silicon Valley. Andreessen Horowitz holds positions in Airbnb, Lyft and Coinbase, and was the first fund to own shares of the social network in 2011. It was Marc Andreessen who sent Musk a message to support him in his hostile takeover of Twitter, according to documents seen by the Post: “If you are considering capital partners, my fund is willing to provide $250 million without any additional work,” the formal request read. But it would later go on to provide $400 million. It was an operation marked by optimism. His partner Horowitz went so far as to say that Musk was “perhaps the only person in the world” who could build the public square that people were waiting for.
In the document The name Sequoia Capital, a firm known for its early investments in companies such as Airbnb, WhatsApp and Zoom in the United States, as well as international heavyweights such as ByteDance, is also mentioned. The closeness between Sequoia and Musk’s new company is due to one person in particular: Roelof Botha, who has known Musk for many years and was even hired by him to work on what would become PayPal. The founder of the social network, Jack Dorsey, also appears in the document. The former CEO of the social network transferred his shares in the new technology company for approximately 1 billion dollars, according to the information published at the time.
Other high-profile funds are also named in the list, which lists nearly 100 entities. Among them is the well-known asset manager Fidelity, with almost 30 separate funds. The name of Larry Ellison, founder of Oracle, is also mentioned, who is said to have put nearly 1 billion dollars in Musk’s hands, according to the American newspaper. The judicial publication also exposes other firms such as Baron, Brookfield, Mirae Asset Innovation or Pershing Square. The cryptocurrency exchange platform Binance is said to have bet 500 million dollars, according to its founder, Changpeng Zhao, who shared at the time that there was “tremendous untapped value” on the platform.
There is also a trace of money from petro-monarchies. The document mentions the Qatar Investment Authority, known for its stake in Barclays, IAG, Credit Suisse and Volkswagen, and for owning – through one of its subsidiaries – 70% of the shares of Paris Saint-Germain. The entity contributed 375 million dollars for the Twitter operation. The investment also aroused the interest of the Saudi prince Al Waleed Bin Talal, who ended up converting his shares in the former Twitter valued at 2 billion dollars, into a stake in the company after its privatization, according to the American newspaper.
Musk’s intention to turn X into “an app for everything” seems far from being realized, however. From the start, the purchase of the social network with the blue bird was marked by turbulence. After taking control of the company, Musk fired half of the workforce: about 7,500 people, which drove away advertisers and widened the financial hole.
The financial problems, coupled with a drop in users and a decline in the quality of content — caused by Musk himself through his controversial posts — have been undermining the company’s value, which, according to the CEO of Tesla, has been reduced to 19 billion dollars. This drop has left the banks with 13 billion dollars in debt, which Musk borrowed from banks such as Bank of America or Morgan Stanley, and which in this type of operation are usually placed with third-party investors. The poor prospects of the company have prevented the sale, and this asset has remained on the banks’ balance sheets longer than any other loan of this type, 20 months and counting. The Wall Street Journal went so far as to call the purchase one of the worst acquisitions since the global financial crisis of 2008 for the seven major banks that financed the deal.
Besides, Follow all the information of Five Days in Facebook, X and Linkedinor in our newsletter Five Day Agenda
Newsletters
Sign up to receive exclusive economic information and the most relevant financial news for you
#Funds #Silicon #Valley #figures #rapper #Saudi #prince #join #Musk #shareholding