The world has never seen this kind of entrepreneur, and the Austin area has never seen this big of a venture capital investment.
Elon Musk's The Boring Company announced April 20 it has raised $675 million series C investment that gives the tunneling startup a nearly $5.7 billion valuation.
The deal is the largest venture investment ever in the Austin area. The next closest was the $300 million series E investment secured earlier this year by energy industry labor marketplace Workrise, which laid off an undisclosed number of staffers in late March.
Boring Co.'s massive funding was led by Vy Capital and Sequoia Capital. Others in on the round included Valor Equity Partners, Founders Fund, Austin-based 8VC, Craft Ventures and DFJ Growth. 8VC declined to comment and officials from Boring Co. couldn't immediately be reached for comment.
In a tweet, Musk said: "Please consider working at The Boring Company! Our goal is to solve traffic, which plagues every major city on Earth."
The Boring Company has only recently begun calling Pflugerville its headquarters after years being based in Palo Alto, Calif. It initially established its Pflugerville space, now its HQ, in December 2020. Its HQ relocation and big funding round come as ramps up activities in Central Texas, including developing a facility just east of Austin in Bastrop County. It has also been in discussions for an alternative transportation system that would connect downtown San Antonio to its international airport, and a potential pedestrian tunnel in Kyle.
Meanwhile, the company has listed 40 Austin-area jobs on its careers page, including roles in software development, electrical and mechanical engineering, finance, facilities management, concrete work and internships.
In addition to the venture firms involved, Boring Co. said several real estate partners are investing, including Brookfield, Lennar, Tishman Speyer and Dacra.
Boring Co.'s main goal is to use its unmanned tunnel mining device, Prufrock, to dig transportation paths in urban areas across the U.S. That, the company says, can alleviate traffic and free up real estate traditionally dedicated to surface roads. Its current Prufrock-2 is designed to mine up to one mile per week. The company’s Prufrock-3 is expected to be faster — mining around seven miles a day.
Its Loop concept, meanwhile, is expected to provide point-to-point transportation on electric vehicles. It’s developing such a system in Las Vegas for a 29-mile intra-city path, and it has envisioned other projects for city-to-city travel using a higher-speed Hyperloop.
Morgan Flager, a managing partner at Austin-based Silverton Partners, wasn't part of The Boring Company's funding round. But he said VC firms getting into a deal of this magnitude typically do so because they envision a potential $15 billion to $20 billion outcome.
“You have a guy who has created a few of those," he said of Musk. “Even in bad market conditions, there are always exceptions. There are always points of light.”
On the impact of this raise on general VC market conditions, Flager said: “This wouldn’t change my perspective of where we’re headed, which is tighter capital markets and more rational company valuations.”
While the funding round is historic in scale for Central Texas, it's just one of several recently headline-grabbing moves involving Musk. In an April 21 federal filing, Musk said he has $46.5 billion in commitments to buy Twitter, including $25 billion in debt financing. Meanwhile, on April 20, Tesla reported profit of $3.3 billion for the first three months of the year, a quarterly record. That topped analysts' projections by about a billion dollars.
Paul Thompson contributed reporting.
