The Boring Company, a tunneling startup that works closely with Tesla, just raised $3 billion through a private funding round

The Vegas Loop, an underground transportation system, is the first commercial project by Elon Musk's Boring Company.

Elon Musk continues to draw investment dollars - this time for a tunneling company that just raised $3 billion so it can help "solve traffic" via expensive underground tunnels.

The Boring Company on Thursday said it had closed a Series D financing round led by the United Arab Emirates and its affiliates that values the company at $23 billion. In April 2022, a Series C funding round had valued Boring at $5.675 billion.

Boring was spun out of SpaceX (SPCX) in 2018. It makes digging machines and develops underground transportation networks. Its first major project was a transportation network located under the Las Vegas Strip that it has been working on since 2021. It also has deals to develop similar projects in Dubai and Nashville.

The company said it would use the new cash to "significantly" increase hiring, develop its technology and scale each of its projects. The Dubai Loop, a planned 14-mile underground route, is expected to cost $545 million to fully develop over a three-year period. Construction is set to begin later this year.

Boring's service works by ferrying passengers from station to station along its network of underground tunnels using Tesla (TSLA) vehicles. The company is working on its 14th tunnel in Las Vegas and its 25th overall, and said it has shuttled 4 million people across the Las Vegas Strip.

While Boring still has humans drive its vehicles, the company said it has demonstrated Tesla's Full Self-Driving technology on "selected segments" of the system. Boring also said it has finished an industrial tunnel at Tesla's sprawling factory in Texas that has made it easier to transport finished Cybertruck electric pickups.

Musk had unusual demands for Boring's investors, which include a slew of his longtime backers. Last week, he confirmed a report that Boring told investors they would need to help recruit employees or assist with business development in order to participate in the funding round. If investors failed to provide good job candidates, Boring would be able to buy back some of their stock, according to the report.

In addition to the UAE, investors including Ron Baron's Baron Capital and Dubai-based Vy Capital also participated in Boring's Series D round. The venture-capital firm run by Antonio Gracias, a former Tesla board member and current SpaceX director, was also listed as an investor.

Boring is the latest company led and owned by Musk to raise cash this year. SpaceX went public in June and raised nearly $86 billion before launching a $25 billion bond offering just a few weeks later. The artificial-intelligence and rocket-launch company's expensive plans are likely to see it lean heavily on the bond market over the next decade, according to analysts.

-William Gavin