A growing list of investors signing up to help fund the $44 billion takeover of Twitter are betting on one big thing: Elon Musk.
It’s unclear whether political motivations play a role in enthusiasm for the 16-year-old public company, though some of the deal’s backers appear to share Musk’s view that Twitter displays an anti-conservative bias and that its content moderation policies should be weakened in the name of free speech.
Backers include some of Silicon Valley’s most prominent venture capitalists, successful entrepreneurs and small-time investors who’ve pooled their money together, according to people familiar with the deal, who spoke on the condition of anonymity to describe sensitive discussions, as well as documents describing the effort to attract investors. Some are forming special purpose vehicles, or syndicates, that aim to steer money to Musk’s bid through investing via larger firms directly connected to the deal.
The bid is attracting international interests as well, drawing scrutiny from national security regulators, according to one of the people familiar with the deal. All have faith that Musk’s latest venture will deliver benefits down the line.
“There’s a group of investors that will support Elon in anything he wants to do,” said Adam Hardej, director of private markets at startup crowdfunding company Stonks, which garnered $20 million worth of investor interest in the deal in May — though the funding has not been committed. “What people miss is that there’s a very solid case for Twitter to go private that has nothing to do with Elon.”
The investors signing up are confident the deal will proceed, according to the people, despite Musk recently telling his more than 90 million Twitter followers the deal is on hold. Musk is personally vetting and approving each investor, according to one of the people.
After initially offering to acquire Twitter, Musk has seen his wealth take a hit with the drop in the stock market. He has committed more than $33 billion to buy Twitter, significantly more than his initial $21 billion equity commitment — lowering the amount of debt he would have to pull from banks to reach the agreed-upon price. The investors he has attracted would contribute to the equity batch, lowering his debt burden.
A significant portion of Musk’s war chest is tied up in shares of Tesla, the electric car company he runs. As a result, according to people briefed on the deal, he has been seeking outside investors to offset his costs.
More than a dozen investors have signed on. The world’s richest person has already received commitments of $1.2 billion from top Silicon Valley venture capital firms Sequoia Capital and Andreessen Horowitz, and $1 billion from old friend and Tesla board member Larry Ellison.
And a recent Securities and Exchange Commission filing said former Twitter CEO Jack Dorsey — who stepped down in November — might be interested in converting his large amount of equity in Twitter when it goes private.
Musk did not respond to a request for comment. Twitter declined to comment for this report.
With around 229 million active daily users, Twitter is much smaller than competing social networks such as Facebook and TikTok, which are used by billions. But Twitter punches well above its weight in terms of influence because it is used so frequently by celebrities, journalists and political figures. The company has been criticized for its slow pace of growth, and it has been hamstrung because its advertising revenue lags behind its peers.
Musk, however, is seen by many investors in Silicon Valley as a potential savior — a turnaround specialist with a record of execution, who will have a personal stake in Twitter’s success. The Tesla and SpaceX CEO is one of the most high-profile and prolific users on the site, often posting multiple times daily. He uses the service to relay updates on his companies to his legions of fans and followers, make jokes and share memes, and telegraph personal interests and political views.
Now Musk has pitched prospective investors on an ambitious plan to unlock three to four times Twitter’s usual revenue — which comes primarily from advertising — through aggressive efforts to monetize the platform, according to projections shared among investors and viewed by The Washington Post.
The pitch deck shared with prospective investors by Stonks projects that a Musk-owned Twitter would make $16.8 billion from advertising in year five. Twitter’s revenue was just over $5 billion last year.
While Musk has no experience running a company reliant on advertising, investors say his track record proves he has the capacity to unlock previously unthinkable amounts of value with his companies — chiefly Tesla, which went from a niche start-up to the world’s most valuable automaker in just over a decade of delivering cars.
Still, the people said, it means investors are in some ways applying the same logic to the social media giant normally reserved for start-ups — when profit and loss projections aren’t as important as the vision for the business and the track record and personality of those behind it.
Musk has framed his decision to acquire Twitter in ideological terms. Like many entrepreneurs who earned their fortunes in Silicon Valley over the last 20 years, Musk says he is perturbed by the control large companies like Facebook, Google and Twitter have over public discourse. He has called Twitter’s decision to ban Donald Trump a mistake and vowed to reverse it.
Ellison, who made his fortune by co-founding the database technology company Oracle, is a stalwart Trump supporter. A person who works with Ellison, speaking on the condition of anonymity to describe private conversations, said that Ellison would not spend a billion dollars if he didn’t think he could make a return.
“No matter what you think of Elon, he’s an out-of-the-box thinker that Larry likes,” said the person, who added they had no specific knowledge of the deal. “As for the business piece of it, Twitter is undervalued.”
Meanwhile, venture capital firm Andreessen Horowitz has been investing in new companies and cryptocurrency technologies that help “creators” deliver content directly to consumers, circumventing gatekeepers like traditional publishers. The firm’s co-founder, Marc Andreessen, has been an outspoken critic of online censorship. (Andreessen is on the board of rival Facebook, potentially setting up another conflict with his firm’s Twitter stake).
Twitter is attractive in part because of its value as a megaphone. “It’s essentially buying the marketing department,” a person familiar with the investors involved in the deal said, speaking on the condition of anonymity to not alienate friends. That motivation might be particularly important for those invested in cryptocurrency, the person said.
Andreessen declined to comment.
Venture capital firm Sequoia’s global managing partner, Doug Leone, was also a prominent Trump ally but broke with the former president over the Jan. 6, 2021, attack on the Capitol, according to his public statements. Several Sequoia partners, with differing political viewpoints, committed funding to take Twitter private, according to a person familiar with the organization’s strategy who spoke on the condition of anonymity to describe confidential matters.
Sequoia also led the first financing round for X.com, an online bank Musk co-founded in 1999. Sequoia invested as well in Musk’s SpaceX and Boring, a tunneling firm.
“For over two decades, we’ve had a front-row seat to Elon’s business and technical prowess,” Sequoia spokeswoman Natalie Miyake said in a statement. “We see, as he does, the opportunity to drive meaningful product innovation that will help unlock Twitter’s full potential as a global platform that connects the world.”
Saudi Arabia’s Prince Alwaleed bin Talal al Saud and Chinese crypto firm Binance are included in the round of financing.
Some of the foreign backers have piqued the interest of the U.S. government. The Committee on Foreign Investment in the United States, known as CFIUS, has inquired with people involved in the merger deal about the foreign investors Musk has brought into his bid because of potential national security concerns, according to a person briefed on the inquiry, who spoke on the condition of anonymity because of the sensitive nature of the talks.
Alwaleed and Binance did not respond to requests for comment.
According to the Stonks pitch deck, Musk aims to reduce “head count and costs across a bloated organization,” growing the ads business and introducing and emphasizing areas such as subscriptions, payments and monetizing the creator economy. The pitch deck also urged caution, underscoring the volatility of the deal.
“Nothing is certain … you could still lose everything if you YOLO on this investment,” read the slide deck, a reference to the saying “you only live once.”
It’s relatively unusual to see what some in Silicon Valley describe as grass-roots funding — where firms like Stonks seek smaller investors to pool together funding to join the bid. Some investors put the dynamic in terms of a “cult of Elon,” where interest in his pursuits materializes because of the desire for proximity to him and his track record.
Jason Calcanis, a friend of Musk and a Silicon Valley investor, has solicited bids from venture capitalists to invest in Twitter. The Post confirmed details of that effort, which involves a minimum investment of $250,000 at a $44 billion valuation, with prospective investors.
It may be born out of necessity, some investors said, suggesting it could mean Musk is having trouble finding enough mainstream funding.
If the total number of investors in the deal reaches 2,000, then Twitter would be required to disclose its financials to the SEC, even if it remains private.
“Whether you think it’s good business or not — this is as engaged as people have been in an acquisition like this and it’s a step in the right direction for private market deals that are typically unavailable to everyday investors,” Hardej said.