Breakingviews: Musk coinvestor roster underwhelms multiple ways

“World’s richest man with extraordinary track record looking for investment partners for latest venture”, sounds like a slam dunk pitch. Elon Musk’s coinvestor roster, which has pledged over $7 billion for his $44 billion Twitter buyout, though, underwhelms in many ways. Sure, some technology heavyweights are putting in substantial amounts. But Musk still is on the hook for over half the purchase price, and the multiple checks from small investors indicate some skepticism about his latest idea.

The coinvestors are a varied bunch, according to a Wednesday filing with the U.S. Securities and Exchange Commission. Prince Alwaleed of Saudi Arabia has agreed to roll 35 million Twitter shares into equity after the buyout. Some large investors have long-standing ties to Musk through earlier Silicon Valley ventures. Larry Ellison, the co-founder of Oracle, owns over 1% of Tesla and is a board member, and he’s investing $1 billion. Sequoia Capital Fund, run by Roelof Botha who worked with Musk at PayPal, is putting in $800 million. There’s also big investors known for tech investing like Fidelity Management, and some that aren’t, like Brookfield.

Musk now will only borrow $6.25 billion from banks against Tesla stock, rather than the previously agreed $12.5 billion. The trouble is, even after that, the additional funding from banks, plus the $7 billion injection, that he’s still on the hook for over $18 billion himself. Though he’s sold almost $9 billion in Tesla stock recently, there’s a hole. And piddling commitments from the likes of Key Wealth Advisors suggests he might have been scraping the barrel to drum up what he already has.

The lack of a deeper roster suggests that coinvestors are less sold on Musk’s concept to buy Twitter than the ability to get further into his inner circle. It also shows that if he wants to share both the risk and the responsibility of owning and running Twitter, that will only get more challenging from here.

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BREAKINGVIEWS