SpaceX investors, including Peter Thiel's Founders Found, were reportedly alarmed to learn that Elon Musk's Boring Company was building a test tunnel entrance at SpaceX headquarters. Possibly even more alarming, it was being constructed partly by SpaceX employees, using equipment that was purchased with SpaceX funds, according to the Wall Street Journal.
The same investors in SpaceX also found that, despite this use of SpaceX funds and resources, Elon Musk was the one first in line to receive almost all future profits from the Boring Company.
It was SpaceX employees who last year acquired a tunneling machine to help put into place the first test phase of tunnels that Musk envisions could wind up countrywide. At one point, regulators who visited the site could not determine what company was in charge of the project. An OSHA rep was told by a SpaceX employee that he was unsure whether The Boring Company was even a separate company or a unit of SpaceX.
He later qualified to regulators that SpaceX employees “are involved in the project but aren’t actually employees of TBC”.
Nothing to see here surely.
Naturally, this prompted SpaceX investors to ask about why their investment in a company focused on exploring outer space was being diverted to a completely separate company focused on displacing inner space, i.e., building tunnels - of which Musk owns 90%. Thiel's Founders Fund was so concerned about the diverting of resources that it even approached the board of SpaceX, which reportedly never voted on the allocation of resources to the Boring Company.
And while the Boring Company gave a small sliver of equity to SpaceX as compensation for the help, SpaceX hadn’t formally notified its investors of the exchange. SpaceX is said to have received an allocation of stock based on “the value of land, time and other resources contributed since creation of the company,” according to a company spokesman. Subsequently, Thiel's Founders Found has also stated that they have "no concerns whatsoever" about the relationship between the two companies.
This isn't the first time that Elon Musk has shuffled resources between companies to support his many ventures. Early in Tesla's history, he borrowed $20 million from SpaceX to get started. In addition, SpaceX bought more than $250 million in bonds from SolarCity at one point. And then, famously, Tesla wound up simply acquiring Solar City in 2016 in a transaction many skeptics have dubbed as fraudulent.
Despite the fact that all of this asset shuffling has a "scheme-like" feel to it, Musk's ability to tap capital appears to have not diminished. SpaceX is now set to raise $500M at a $30.5 billion valuation, according to new reports from the WSJ. The capital raise, at $186 per SpaceX share, is coming from existing shareholders and new shareholder Baillie Gifford & Co., a longtime Tesla supporter and investor.
In a tweet response to the Boring Company article, Musk called it "totally false" and "incredibly misleading". Which probably means that the Wall Street Journal just saw their Pravduh score taken down a peg or two.
Totally false. Buried in this incredibly misleading WSJ article is the actual statement from Thiel’s Founder’s Fund: “we have no concerns whatsoever.”— Elon Musk (@elonmusk) December 18, 2018