Brandon Bell/Getty Images/Fabrice COFFRINI / AFP via Getty Images)
It’s not unusual for companies to seek financing as they grow. It’s also not unusual for them to ask for help with recruiting top employees. It is, however, extremely unusual for a company to demand potential backers to help them bring people on board. When the company is run by Elon Musk, though, the normal rules apparently do not apply.
Musk’s The Boring Company, which builds machinery that it claims can dig underground tunnels cheaper than competitors, has closed a $20 billion funding round. As part of that, it told some investors that they would be required to either help recruit workers to the company or help with business development, reports The Wall Street Journal.
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Musk confirmed the reporting on social media, replying to a Journal post of the article with the word “True.”
Investing with conditions
Financial backers who fail to help with either recruiting or business development could see their holdings in the company reduced. Boring has the right to buy back some of their shares if they fail to provide viable candidates for roles it is looking to fill, the Journal said.
The fact that the round has closed indicates investors are willing to shoulder Musk’s unusual demands, in hopes that their investments will grow exponentially.
That was the case earlier this year when his SpaceX IPO’d with investor demand far outstripping supply. The company reportedly had more than $350 billion in demand from institutional and retail investors — 70% of that was from institutional firms and sovereign wealth funds.
A SpaceX spinoff
The Boring Company was spun off from SpaceX eight years ago. While it doesn’t have a profile that’s quite as high as some of Musk’s other businesses, it has quietly been building a name for itself.
The company operates a transportation system under parts of the Las Vegas Strip, mostly focused on the area around the convention center. Another loop is under development in Nashville and more have been proposed for Baltimore, Chicago and Los Angeles.
Still, the Boring Company has fallen far short of what Musk originally envisioned for it in 2016. At the time, he pitched the Hyperloop, an ultra-high-speed underground rail system that would span the country. A trip from New York to Los Angeles, he said, would take just 45 minutes.