High-profile investors who suffered painful losses backing Elon Musk’s takeover of Twitter are now vying for a sweet consolation prize – in the form of increased stakes in artificial intelligence startup d ‘Elon Musk, according to a report.
Musk sold 25% of the shares of xAI, which he founded last year, to investors who helped him finance his project. $44 billion acquisition from social media platform X, formerly Twitter, in 2022, according to sources familiar with the discussions told the Financial Times.
XAI is expected to close a $5 billion fundraising round as early as Wednesday, doubling the company’s valuation to $50 billion in just six months, according to the newspaper.
Those who supported Musk’s takeover of Twitter – which saw advertisers and users flee due to concerns about a lack of content regulation – find themselves sitting on billions of dollars in unrealized losses. But xAI’s gains could help them recover unfavorable investments.
Investors expected to benefit from stakes in both Musk companies include Fidelity, Oracle co-founder Larry Ellison, Saudi Prince Alwaleed bin Talal, Twitter founder Jack Dorsey and venture capital firms Sequoia Capital and Andreessen Horowitz, according to the report.
This unique “reward” system is the latest way Musk is partnering his companies, which also include rocket maker SpaceX and electric vehicle maker Tesla.
Many investors who helped finance Musk’s purchase of Twitter justified it as an investment not in X, but in Musk himself.
“There are few adages in technology that really hold water,” an investor in Musk’s companies told the Financial Times. “Never Bet Against Elon is one.”
The billionaire’s AI startup has been growing rapidly and will have raised around $11 billion in total investments after this week’s funding round closes – welcome growth for Twitter investors, who have invested around $7 billion of dollars in the acquisition of Musk.
“It’s difficult to manage conflicts of interest in these kinds of things,” an investor in one of the companies told the Financial Times. “You have to be a fiduciary and you are on both sides. »
In May, xAI completed a $6 billion fundraising round to give it a valuation of $24 billion. Some of those who supported Musk’s purchase of Twitter, like Andreessen Horowitz, Sequoia Capital, Prince Alwaleed and Fidelity, have invested further in the startup.
In his latest fundraising round, Musk only authorized xAI’s previous backers to make new investments, several people familiar with the matter told the Financial Times.
Musk’s influence has only grown over the past year, as he has become a close confidant of President-elect Donald Trump. Musk, the world’s richest person with a net worth of $324.2 billion according to Forbes, has pumped more than $100 million into the Trump campaign through pro-Trump PACs and rallied on behalf of the candidate in swing states.
Since Trump’s victory, Musk has remained close, meeting with Trump allies and Cabinet aspirants at the president-elect’s Mar-a-Lago residence. He even obtained “uncle status”, according to Trump’s granddaughter.
Musk’s influence on Trump is evident after the president-elect took Musk’s pitch to create a Department of Government Effectiveness — and appointed the tech junkie to lead it. However Trump’s pick for Treasury secretary – “business as-usual” Scott Bessent, as Musk called him – shows that the billionaire does not always get what he wants.
Since Musk took over the platform and renamed it X, the social media platform’s value has plummeted.
Advertisers fled the platform while racist and anti-Semitic messages appeared alongside their paid advertisements, and after Musk approved an anti-Semitic post.
Left-wing celebrities have also posted “goodbyes” to their millions of followers turned to rivals like Bluesky or Threads following calls for Musk to better regulate the platform.
Banks including Morgan Stanley and Barclays are currently sitting on Twitter debt worth $13 billion, and Fidelity has cut its X investment by almost 80% to $9.4 billion, according to the report.