By Rachael Levy
London: Some staff at Elon Musk’s Neuralink are preparing to sell shares in the brain implant company following a surge in its valuation following its first human trial, according to people familiar with the matter.
Stock Compensation This is a great incentive for employees of start-ups like Neuralink. The shares they receive are not listed on the stock exchange and employees who want to sell them without the company’s approval have to resort to complex restructuring strategies in niche markets. Private stock exchanges.
Now, some of Neuralink’s employees and investors are preparing for Musk’s company to launch a takeover bid next month to buy back shares from employees it wants to sell, according to two people briefed on the matter who requested anonymity because they were not authorized to speak publicly.
Neuralink and Musk did not respond to requests for comment.
The jump in Neuralink’s valuation following the launch of its first human trial in January is evident in secondary market operationsWhile these transactions are low-volume and do not provide a reliable figure for Neuralink’s current valuation, they all point to an increase in value, some as much as $8 billion, more than double what the company was worth last year.
Neuralink has hailed its first human trial as a success. The company said it had fixed an initial problem – the implant’s filaments retracted from the brain of the first patient – and is preparing to conduct further trials in Britain and Canada. Musk recently said the company plans to implant a second patient soon.
It was not immediately clear whether Neuralink has formally scheduled a takeover bid or what its terms would be. Last fall, Neuralink launched a takeover bid for employees that was priced at about $19 a share, when some shares were trading in the secondary market near $35, according to a Reuters review of transactions and people familiar with the matter. It is common for startups to launch takeover bids at a discount to secondary market values.
Musk has for years created a scarcity of shares in his startups, which also include rocket company SpaceX and artificial intelligence developer xAI, turning them into exclusive clubs that only accept a select few investors, such as Peter Thiel’s Founders Fund.
That scarcity has made shares coveted and investors content with receiving little information about how startups have fared once they’ve invested, according to investors and people who have worked closely with Musk. A Founders Fund spokeswoman declined to comment.
The impact of this shortage is reflected in recent transactions. Buyers on private exchanges paid a premium of between 84% and 137% in recent weeks over the $3.5 billion valuation Neuralink reached in its last year. private fundraising round last November, according to a Reuters analysis of recent transactions and PitchBook data.
Most startup stocks don’t trade at such premiums, and most of them trade at discounts. private company operations at a 32 percent discount to the valuation of its most recent fundraising, according to brokerage Forge Global.
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Neuralink’s valuation has skyrocketed since it launched in 2016, and employees who received stock at or shortly after launch at a fraction of its current value stand to reap a big profit. Some buyers are offering as much as $50 a share, up from $35 when the human trial began in January, said Sim Desai, chief executive of Hiive, who said his secondary platform connects buyers and sellers interested in trading Neuralink stock.
SpaceX, Musk’s biggest investment valuable company as well Electric carmaker Tesla also trades at a premium on the secondary market. A recent transaction for $130.11 valued the company at $232 billion, according to secondary transaction data. The company valued itself at about $180 billion in a private funding round in April, according to Pitchbook. SpaceX did not respond to a request for comment.
The sources said Neuralink asks its employees not to trade its shares on the secondary market, preferring to sell them during takeover bids that the company can control.
One reason, according to Hiive’s Desai, is that federal regulation prevents private companies Desai said allowing unlimited transactions on the secondary market, especially for booming companies like Neuralink, could push a company over the edge. The other reason is companies that retain the ability to channel access to the desired investors at the chosen price.
“Basically, it’s an opportunity for a company, if it restricts transactions, to do a favor to its close friends and insiders,” Desai said.
Due to commercial restrictions imposed by Neuralink, Hiive only facilitates the Search for a partner for actionsand the parties have to arrange payment and transfer of shares on their own, he said.
(Reporting by Rachael Levy in Washington, DC; editing by Greg Roumeliotis and Anna Driver)
