Boring Company, the tunnel-digging startup led by Elon Musk, is pursuing a new funding round that would value it at about $20 billion (approximately 29 trillion won). The company has yet to demonstrate meaningful business viability. Even so, attention is focused on whether the "Musk" effect will help it succeed in raising the capital.
On the 26th, the Wall Street Journal reported, citing people familiar with the deal, that Boring Company is in talks to raise about $4 billion (approximately 5.8 trillion won). However, the investment has not yet been finalized.
Boring Company builds tunnel-boring machines that it claims can dig underground more cheaply than conventional construction firms. Spun off from SpaceX in 2018, the company operates a transit network beneath the Las Vegas Strip. Drivers ferry passengers to the Las Vegas Convention Center in Tesla vehicles.
Boring Company was valued at about $5.7 billion (approximately 8.3 trillion won) during its 2022 funding round. At that time, it raised $675 million (approximately 987.6 billion won) from investors including Vy Capital, Sequoia Capital and Founders Fund. If the current investment goes through, its valuation would jump about fourfold.
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The company pursued projects with private funding in Baltimore, Chicago and Los Angeles. The plan was to generate revenue by charging fares to passengers of the underground transit systems. However, many of the projects failed to materialize. Even so, numerous private-market investors view investing in Musk-affiliated companies as a "sure bet." They are even willing to pay a premium to gain access to his portfolio.
In fact, investors who participated in Musk's $44 billion (approximately 64.4 trillion won) acquisition of Twitter in 2022 saw losses for months. But they ultimately profited after Musk merged Twitter into his artificial intelligence (AI) startup xAI, and then integrated that into SpaceX.
On the other hand, the recent sharp drop in the valuations of Musk's publicly traded companies Tesla and SpaceX is a negative factor. Tesla's stock price was down 39.9% from the start of the year as of the 24th. On the 23rd, its earnings release day, the company missed its targets and recorded negative cash flow for the first time in two years, falling more than 15% in a single day. Market capitalization of $215 billion (approximately 315 trillion won) evaporated.
Musk's rocket company SpaceX went public in June in the largest-ever initial public offering (IPO), raising $86 billion (approximately 126 trillion won) on Wall Street. Its market capitalization nearly doubled immediately after listing but has recently fallen about 50% from its peak.
Meanwhile, Boring Company is currently developing a new underground loop in Nashville with private funding. Earlier, in February, it announced a new project to build an underground loop in Dubai. The company said the first four-mile section would cost $154 million (approximately 230 billion won) and take one year to complete. The second phase, extending the line to 14 miles, is expected to take three years and cost $545 million (approximately 800 billion won). However, it remains unclear who will bear the cost of developing this project.
