Prominent investors who suffered painful losses supporting Elon Musk's acquisition of Twitter are now eyeing a sweet consolation prize in the form of a surge in stakes in Musk's artificial intelligence startup, according to a report. It is said that there is.
Musk sold a 25% stake in xAI, which he founded last year, to investors who funded his $44 billion acquisition of social media platform X (formerly known as Twitter) in 2022. said a person familiar with the talks. told the Financial Times.
The paper said XAI is expected to close a $5 billion funding round as early as Wednesday, doubling the company's valuation to $50 billion in just six months.
Those who supported Mr. Musk's takeover of Twitter, which sent advertisers and users fleeing over concerns about a lack of content regulation, continue to be saddled with billions of dollars worth of unrealized losses. But xAI's profits may help recoup unfavorable investments.
Investors set to benefit from Musk's stake include Fidelity, Oracle co-founder Larry Ellison, Saudi prince Alwaleed bin Talal, Twitter founder Jack Dorsey and venture firm Sequoia, according to the report.・Includes Capital and Andreessen Horowitz.
The unique “reward” system is Musk's latest way to connect his companies, which also include rocket maker SpaceX and electric car maker Tesla.
Many of the investors who funded Musk's Twitter acquisition justified it as an investment in Musk himself, not X.
“There are very few maxims that really work in the technology industry,” one investor in Mr. Musk's company told the Financial Times. “Never bet against Elon.”
The billionaire's AI startup is growing rapidly and is on track to raise a total investment of about $11 billion after closing this week's funding round. The growth is welcome to Twitter investors, who poured about $7 billion into Musk's acquisition.
“It's difficult to manage conflicts of interest in this kind of thing,” one company investor told the Financial Times. “You have to be a fiduciary and you have to be on both sides.”
In May, xAI closed a $6 billion funding round, giving it a valuation of $24 billion. Some of the companies that backed Musk's Twitter acquisition, including Andreessen Horowitz, Sequoia Capital, Prince Alwaleed and Fidelity, poured further investment into the startup.
Several people familiar with the matter told the Financial Times that during the latest round of funding, Musk only allowed new investments from previous xAI backers.
Musk has become a close ally of President-elect Donald Trump, and his influence has only grown over the past year. Musk, the world's richest man with a net worth of $324.2 billion, according to Forbes, has poured more than $100 million into the Trump campaign through pro-Trump PACs and rallied on behalf of the candidate in battleground states.
Since Mr. Trump's victory, Mr. Musk has remained close by, meeting with Mr. Trump's allies and Cabinet nominees at the president-elect's Mar-a-Lago residence. Even he Obtained the status of an uncle, According to President Trump's granddaughter.
Mr. Musk's influence on Mr. Trump is clear from the president-elect's decision to heed Mr. Musk's proposal to form a Department of Government Efficiency and appoint the tech enthusiast to head the agency. But Trump's choice for Treasury Secretary, Scott Bessent, who Musk calls “business as usual,” shows that the billionaire doesn't always get his way.
The social media platform's value has declined since Musk took over and rebranded it as “X.”
Racist and anti-Semitic posts appeared next to paid ads, and advertisers fled the platform after Musk endorsed them.
Celebrities on the left also posted “goodbye” messages to their millions of X followers and turned to rivals like Bluesky and Threads over calls for Mr. Musk to tighten regulations on the platform.
Banks such as Morgan Stanley and Barclays now have $13 billion worth of Twitter debt, and Fidelity has written down its X investment by nearly 80% to a valuation of $9.4 billion, according to the report.
