A group of more than three dozen investors who had planned to put $1 billion into Donald Trump’s new social media startup “Truth Social,” are starting to eye the exits as bad news keeps piling up around the deal, Politico reports.
The investors cited a myriad of problems, including a Securities and Exchange Commission investigation, a lawsuit by a scorned business partner against the company taking Trump’s venture public and reports that the Trump social network at the heart of the planned operation is struggling to pay its bills.
Already, investors who had promised $138 million in capital have pulled out, with the SEC yet to OK the public offering nearly a year after its announcement.
As reported by Politico, “The hedge funds, trading firms and other major backers are questioning whether the financial riches that first attracted them to the transaction are still strong enough to hold their interest in a deal fraught with troubles, according to four investors who asked not to be named.”
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“Negotiations have been ongoing as some investors seek bigger potential profits in exchange for following through on commitments to put hundreds of millions of dollars into the venture, which planned a public stock exchange listing through a special purpose acquisition company, or SPAC.”
“This deal has taken more left turns than a doorknob,” said Kristi Marvin, a former investment banker who runs data and research company SPACInsider, according to Politico. “Now, it’s just got so much hair on it.”
At stake for Trump and his startup — the company behind conservative social media app Truth Social — is hundreds of millions of dollars, marking the latest blow to the former president’s business empire since he left office. New York in September filed a sweeping lawsuit against Trump and his family for alleged fraud at the Trump Organization.
Ultimately, if Digital World is able to convince the investors to stay in, the company will still need SEC approval before it can close the Trump Media transaction. In the meantime, Trump Media and Digital World have been left scrambling to save the deal.
