According to sources familiar with the negotiations, Elon Musk's tunneling startup, The Boring Company, is in talks for a new funding round, with a potential post-money valuation of around $20 billion.
Multiple sources indicate the company plans to raise approximately $4 billion. The funding round has not yet closed, and sources caution that the deal terms could still change.
Steve Davis, president of The Boring Company, did not respond to media requests for comment.
The Boring Company develops its own tunnel boring machines, claiming its underground excavation costs are lower than those of traditional engineering firms. The company, spun off from SpaceX in 2018, has built a transit loop under the Las Vegas Strip, using Tesla Motors vehicles to shuttle passengers between the Las Vegas Convention Center.
After a funding round in 2022, the company was valued at approximately $5.7 billion. That round raised $675 million from investors including Vy Capital, Sequoia Capital, and Founders Fund.
The company has pitched privately funded underground tunnel projects to cities like Baltimore, Chicago, and Los Angeles, aiming to profit from ticket sales for underground transit routes. However, most of these projects did not come to fruition.
Nonetheless, many private market investors still view Musk's companies as sure bets, willing to pay a premium for the opportunity to invest in his ventures.
In 2022, a group of investors put up $44 billion to support Musk's acquisition of Twitter, which resulted in paper losses for months after the deal closed. But the billionaire entrepreneur later merged the struggling Twitter with his AI company, xAI, and subsequently integrated that entity into SpaceX, eventually turning a profit for investors.
Recently, the valuations of Musk's two publicly traded companies, Tesla Motors and SpaceX, have dropped sharply. Tesla Motors shares fell 15% on Thursday; the electric vehicle company's earnings missed estimates, and it reported negative free cash flow for the first time in two years, erasing $215 billion in market value in a single day.
Musk's aerospace company, SpaceX, completed its largest-ever IPO in June, raising $86 billion from Wall Street. The stock initially nearly doubled in price but has since fallen about 50% from its peak.
The Boring Company is building a new underground loop in Nashville at its own expense.
In February, the company announced a tunnel loop project in Dubai. The company stated that the first phase, a 4-mile line, would cost $154 million and take one year to build; the second phase would extend the line to 14 miles, with an expected three-year timeline and a total investment of $545 million. The project's funding source is currently unclear.
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