The CEO of Tesla, Elon Musk, started making promises about what he might achieve with Twitter in a number of talks over the previous few days.
According to four individuals who were informed on the talks, Mr. Musk, the world’s wealthiest man, promised prospective investors that he could treble the number of users on the platform to more than half a billion by 2025. He also claimed that, by that time, Twitter’s income would have more than doubled and that tens of millions of paying members would have joined the site. Two persons who spoke with him confirmed this.
If investors follow Mr. Musk’s advice, he claims they would get a substantial return on their investment. And he informed them that he would be taking over as the company’s top executive, at least for a period of time.
Investors jumped on board. Mr. Musk said on Thursday that he had secured around $7 billion from 18 different organisations to assist him in funding his bombshell $44 billion purchase of Twitter. Members of Mr. Musk’s Silicon Valley network — including venture capital firms such as Andreessen Horowitz and tech moguls such as Larry Ellison — joined forces with cryptocurrency businesses, family offices, sovereign wealth funds, real estate enterprises, and mutual-fund corporations to bankroll the project.
As a result of Mr. Musk’s business ambitions for Twitter, several conventional private equity companies declined to participate, according to individuals familiar with the situation. However, Silicon Valley investors and others clamoured to participate, according to those with knowledge of the situation. They said that their confidence in Mr. Musk was the most important factor in their decision.
It was a clue that Mr. Musk, who is the CEO of the electric automaker Tesla as well as the rocket business SpaceX, was still figuring out his strategy for Twitter after signing a deal to acquire the company only ten days before the announcement of the additional cash pledges. Earlier this month, when the 50-year-old revealed his plan to seize control of Twitter, he looked to be ill equipped for the task. He did not have any finance in place, did not indicate who may be in charge of the firm, and did not explain how the company would generate money.
Many of the new investors had beliefs or interests that were similar to those of Mr. Musk. Similarly to the millionaire, Marc Andreessen, the founder of the venture capital firm Andreessen Horowitz, is a supporter of free expression and a proponent of cryptocurrency technology.
A securities filing by Mr. Musk on Thursday said that he was continuing discussions with additional investors, including Jack Dorsey, the co-founder of the social media platform Twitter. Mr. Musk said that he and Mr. Dorsey have discussed the possibility of rolling over Mr. Dorsey’s interest in the firm so that he may continue to be an investor when Mr. Musk takes charge. Moreover, he is already examining requests from other investors and might make additional money commitments in the coming weeks, according to a source with knowledge of the situation.
The fresh finances may provide investors with more confidence that Mr. Musk’s acquisition of Twitter will be completed. As a result, given Mr. Musk’s unpredictable character and the amount of cash that he may be personally liable for, several investors were sceptical of his ability to pull it off. It is expected that the transaction would finalise in three to six months. If Mr. Musk’s funding fails, he will be required to pay a $1 billion breakup fee.
Mr. Musk said that he was quite confident in his ability to double or treble the money of investors. He went on to say that although a return of five to ten times would be difficult, it was feasible if all went well. According to the source, the billionaire has also committed to dedicate more time and attention to Twitter.
According to two individuals who saw the projections, Twitter’s yearly revenue might reach $13 billion by 2025 and its profits before interest, taxes, depreciation, and amortisation (EBITDA) could reach $6 billion by then.
There were just a few days left for investors to make a choice. According to one source, several were dissatisfied with the pace and lack of depth in the company’s governance concerns, which included voting rights, information rights, and the membership of Twitter’s board of directors under Mr. Musk’s direction. The $44 billion price tag that Mr. Musk is paying for Twitter was also a source of contention, according to the source, considering the company’s uneven earnings.
Some investors didn’t wait for Mr. Musk to reach out to them; they reached out to him themselves. According to a source familiar with the matter, Binance reached out to him personally and offered him a $500 million investment. According to the source, the cryptocurrency exchange recognised an opportunity to leverage the blockchain, which is a distributed database for digital information, to assist combat bots, which are artificial accounts that spam users.
Vy Capital, an internet-focused investment business headquartered in Dubai; Litani Ventures, the investment fund established by Peter Rahal, the company’s co-founder; and DFJ Growth IV Partners, a venture capital firm, are among the other investors.
Earlier this week, the prince, who did not reply to a request for comment, tweeted about Mr. Musk, referring to him as his “new buddy.” The billionaire will be a “great leader for Twitter,” according to the founder of Twitter.
