A Very Boring Startup

Michael Wenner
Dec 6th, 2019

This week's post is a boring one. No, not in the sense that it's not interesting. It's about The Boring Company.

The Boring Company is one of the side ventures of real life Tony Stark, Elon Musk. Musk, who co-founded Tesla and founded SpaceX, came up with the idea for The Boring Company while sitting in LA's unbearable traffic one day.

"Traffic is driving me nuts. Am going to build a tunnel boring machine and just start digging...," Musk tweeted in December 2016. He elaborated in follow-up tweets saying "I am actually going to do this" and "It shall be called 'The Boring Company'."

Just a few months later, in February 2017, The Boring Company had already begun digging a 30-foot-wide, 50-foot-long and 15-foot-deep "test trench" at SpaceX's headquarters in its quest to revolutionize the way people get around cities. At a TED Talk in April 2017, Musk estimated The Boring Company took 2–3% of his time and was a "personal hobby."

So where does The Boring Company currently stand in terms of actually building tunnels? The company's website shows five projects, with only one of them completed - the test tunnel in Hawthorne, CA. The test tunnel cost $10 million to build and "Due to unbelievably high demand, tours through the Hawthorne Test Tunnel are by invitation only."

Of the remaining four, only one is under construction. The Las Vegas Convention Center Loop in Las Vegas is being built to reduce travel time around the campus to a 1 minute ride from a 15 minute walk. The website even shows a highly optimistic plan in which the tunnel could be extended through literally the entire Las Vegas strip.

The remaining three projects are in the review and planning stages. Whether they ever begin construction is anyone's guess, however, the projects are planned for Los Angeles, Chicago and Washington, D.C. to Baltimore.

So who owns The Boring Company and who's funding it? Initially, it was a subsidiary of SpaceX, becoming a fully independent company in 2018. In its first few years, the company had been hesitant to raise outside capital, except of course through the sale of 20,000 $500 "not a flamethrower" flamethrowers.

As of December 2018, 90% of The Boring Company was owned by Musk with 6% owned by SpaceX in exchange for using SpaceX resources. During 2018, The Boring Company raised $113 million in non-outside capital, with more than 90% of it coming from Musk. This past July, the company raised outside capital for the first time, selling $120 million in stock at a valuation of $920 million to a handful of venture capital firms.

So while it's anyone's guess what the future holds for The Boring Company, especially with Musk at the helm, one thing is almost certain - investing in it will be both polarizing and extremely entertaining, just like Tesla.

More Elon:

Funnest Funding Rounds of The Week

Steel City gets its first unicorn. Language-learning app Duolingo has raised $30 million in Series F funding from Alphabet's CapitalG at a $1.5 billion valuation. The funding round makes Duolingo, which is the most-downloaded and top-grossing education app in the world, Pittsburgh's first VC-backed unicorn. Duolingo has now raised a total of $138 million and plans to use the latest funds to expand its technology, marketing and increase staff by 50%. Duolingo has seen bookings increase from $1 million to $100 million over the last three years.

They're exactly who you'd want as an investor. Autonomous shuttle service provider May Mobility has raised $50 million in Series B funding from Toyota, the largest automobile manufacturer in the world. May Mobility will use the funds to expand its AV shuttle fleet, as well as expand its engineering and operations staff. The company currently has 25 autonomous shuttles operating throughout Detroit, Grand Rapids and Providence, with the goal of expanding to 25 shuttles per each city. In what may be even more important than the funding, as part of the round Toyota selected May Mobility as one of its "autonomous driving providers for future open platforms."

Just don't call it software as a service. Rapyd, which is described as offering fintech-as-a-service through its API, has raised $20 million in funding at a $1.2 billion valuation. The company makes it easy for customers to integrate a wide array of financial capabilities such as payments, checkout, fund collection and disbursement and foreign exchange. The round comes on the heels of a $100 million funding round in October, when Rapyd was valued at $1 billion. Rapyd, which has now raised raised $180 million, is looking to spend some of its money on acquisitions. "We’ve started to look at two acquisitions that were bigger than what we originally planned, with prices more in the range of $100 million," CEO and co-founder Arik Shtilman said.

They picked a good week to raise money. Postscript, which helps e-commerce companies connect with customers using SMS campaigns, has raised $4.5 million in funding. The funding comes as this year's Cyber Monday and Black Friday became the largest and third-largest, respectively, online shopping days in history. Cyber Monday shoppers spent a record $9.4 billion online, while Black Friday shoppers spent $7.4 billion online, which ranks just below last year's $7.9 billion Cyber Monday. Postscript, which even has Shopify plugin, could very well end up being an acquisition target as e-commerce continues to gain popularity.

Could Goodwill become a unicorn? Vinted, which lets users buy and sell second-hand clothing, has raised €128 million (or about $140 million), at a valuation of more than $1 billion. Vinted, which is headquartered in Lithuania, will use the funding to continue expanding in Europe and adding features to its platform. This is just the latest company in the second-hand clothing space to gain traction. In the U.S., Ebay, OfferUp, Letgo, Poshmark and The RealReal have all taken advantage of reselling used clothing as the "circular economy" becomes more popular among conscious consumers.
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