When Elon Musk calls, you pick up the phone. Right?
But based on new filings, friends of Elon who got in on his Twitter deal may be wishing they’d missed his call. As I wrote this morning for Fortune:
Last year, Elon Musk burnished his legend as the greatest salesman on the planet by rallying arguably the most prestigious roster of technology superstars ever assembled for a single investment. The Tesla CEO lured assorted icons from Marc Andreessen to Changpeng Zhao to provide a king’s ransom in bolstering his bid for what now looks like a turkey squawking in 280 characters—Twitter.
All told, Musk raised $7.1 billion of the $44 billion purchase price from 19 prestigious partners. He also borrowed $13 billion from a group of banks including Morgan Stanley and Mitsubishi, so the transaction’s total equity portion reached over $30 billion, with Musk himself supplying at least $24 billion. Hence, the partners own a bit less than one-quarter of the enterprise. Seventeen players furnished cash, while two, Fidelity and Kingdom Holding, controlled by Prince Al Waleed bin Talal of Saudi Arabia, rolled their pre-Musk shares into stakes in the newly private enterprise.
Twitter’s now a private enterprise, so its financials are no longer available for review. And sure, investors and outsiders alike have had a pretty good idea for a while now that things maybe aren’t going great at Elon’s new project. But now we’re getting an idea of just how not great they really are, via filings from Fidelity’s Contrafund. Though the fund holds just a tiny sliver of Twitter shares, it’s an open-ended vehicle where investors can buy and sell shares, so it must provide a market value for each of its stocks every month. And the numbers are nothing short of awful:
In November, the Contrafund wrote down its Twitter shares by 56%, to $23.5 million. In March came another 7.5% hit to $19.5 million. And on May 28, the Contrafund disclosed that through late April, it had subtracted an additional 3.5% from its starting, full valuation, whittling the estimated worth of Twitter on its books to $17.65 million, for a total, seven-month takedown of 67%. Hence, Fidelity’s formula is now marking Twitter’s equity at one-third of the roughly $31 billion, or $10 billion. Add back the $13 billion in debt, and the total value of Twitter would now be in the $23 billion range. So Twitter appears to be worth about 53% of the $44 billion purchase price.
We can apply the same math to the 19 equity partners’ original, $7.1 billion investment. By Fidelity’s measure, it’s now worth one-third of that total, or $2.34 billion, meaning that as of now, the group has suffered an almost $5 billion loss.
You can read the full story here to see what that means individually for Larry Ellison, Sequoia, Andreessen Horowitz Capital Fund, and the other investors. But suffice it to say, at least given how this deal has fared so far, being a friend of Elon’s did not come with benefits.
Shawn Tully
Submit a deal for the Term Sheet newsletter here.
Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
– Pixxel, an El Segundo, Calif.-based hyperspectral earth imaging technology company, raised $36 Million in Series B funding. Google led the round and was joined by Radical Ventures, Lightspeed, Blume Ventures, growx, Sparta, and Athera.
– Ceibo, a Santiago, Chile-based copper extraction technology company, raised $30 million in Series B funding. Energy Impact Partners led the round and was joined by CoTec Holdings, Audley, Orion Resources, Unearth, Pincus Green, Khosla Ventures, and Aurus Ventures.
– Ariga, a Tel Aviv-based database schema management platform, raised $18 million in funding co-led by Tiger Global and TLV Partners.
– Galvanick, a Los Angeles-based industrial infrastructure cybersecurity company, raised $10 million in seed funding. MaC Venture Capital, Founders Fund, Village Global, Countdown Capital, Hanover Technology Investment Management, Shrug Capital, 8090 Industries, and others invested in the round.
– Chamberlain Coffee, a Los Angeles-based coffee brand, raised $7 million in funding co-led by Blazar Capital, founder Emma Chamberlain, and United Talent Agency.
– Demox Labs, a San Francisco-based privacy infrastructure company for zero-knowledge blockchains, raised $4.5 million in pre-seed funding. HackVC led the round and was joined by DCVC, Amplify Partners, Coinbase Ventures, CRV, OpenSea, and CSquared.
– Platformatic, a San Francisco-based backend development platform for developers and enterprises, raised $3.5 million in seed funding. Decibel, Panache Ventures, GitHub founder Tom Preston-Werner, and other angels invested in the round.
– XONAI, a London-based cloud optimization platform, raised $3.5 million in seed funding. Kadmos Capital led the round and was joined by Adara Ventures, Deep Science Ventures, Nauta Capital, Notion Capital, and others.
PRIVATE EQUITY
– Allied Industrial Partners acquired a majority stake in Mat Tech Industrial Services, an Alvin, Texas-based rental and waste management services provider. Financial terms were not disclosed.
– Altus Fire and Life Safety, backed by AE Industrial Partners, acquired Priority Fire and Security, a Clinton, Mass.-based emergency fire service provider. Financial terms were not disclosed.
– Baird Capital’s Global Private Equity team acquired a minority stake in JMAN Group, a Chennai, India- and London-based data consultancy. Financial terms were not disclosed.
– Ingka Investments acquired Made4net, a Teaneck, N.J.-based warehouse management system and supply chain execution software provider, from Thompson Street Capital Partners. Financial terms were not disclosed.
– iNovex, backed by Enlightenment Capital, agreed to acquire Secure Innovations, a Columbia, Md.-based cybersecurity business. Financial terms were not disclosed.
– Kian Capital Partners acquired Team Air Distributing, a Nashville-based HVAC equipment distributor. Financial terms were not disclosed.
OTHER
– The Brandtech Group acquired Jellyfish, a London-based digital media and marketing group. Financial terms were not disclosed.
– Unbabel acquired Bablic, a Tel Aviv-based website translation company. Financial terms were not disclosed.
