Elon Musk’s artificial intelligence startup xAI is near to closing a funding round that would value the company at $18 billion, Bloomberg reported on Thursday, funds that could boost the billionaire’s project as it works to gain ground on upstart rivals like OpenAI and Anthropic as well as see off competition from Big Tech giants including Meta, Microsoft and Google.
Elon Musk’s xAI is reportedly close to closing a new funding round.
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Key Takeaways
- Musk’s X.AI Corp. could close its latest funding round as soon as this week, Bloomberg reported, citing people familiar with the matter.
- Details such as timing, valuation and the size of the round are still up in the air, the unnamed sources told Bloomberg, noting that deliberations on the round are ongoing.
- Previous reports from Bloomberg and other outlets including TechCrunch and The Information suggest Musk’s AI startup is raising $6 billion at a valuation of around $18 billion, up from reports of a deal worth around $3 billion at a $15 billion pre-money valuation due to intense investor interest.
- Participants in the round reportedly include venture capital giant Sequoia Capital, a Silicon Valley titan with a long history of backing Musk’s projects, including the PayPal precursor X.com, tunneling business The Boring Company, rocket venture SpaceX, as well as supporting the billionaire’s efforts to take over Twitter, now X, in 2022.
- Investors are reportedly being sold on Musk’s track record at Tesla and SpaceX, as well as company links to Musk’s social media platform X, a source of data that can be used to train large language models underpinning products like the Grok chatbot.
Key Background
Musk announced xAI around a year ago with a goal “to understand the true nature of the universe.”
The billionaire said he wants to build a company to rival industry leaders like Google’s DeepMind and ChatGPT maker OpenAI. Musk was a cofounder and early backer of OpenAI but left the company — allegedly in the wake of a failed takeover attempt and conflicts of interest — and now feuds publicly with CEO and fellow cofounder Sam Altman.
Musk has excoriated the company and Altman for seeking profit over AI safety, going as far as suing OpenAI for allegedly reneging on their original goal of developing an open-source artificial general intelligence that would “benefit humanity” in favour of maximising profits.
In November, xAI unveiled chatbot Grok, branded as a rebellious and mischievous alternative to ChatGPT (jokingly dubbed “TruthGPT”).
The funding will help accelerate efforts to bring Grok in line with performance from AI leaders like OpenAI’s GPT, Meta’s Llama, Anthropic’s Claude and Google’s Gemini.
Forbes Valuation
Musk is worth an estimated $194.7 billion. He is the third richest person on Earth, after LVMH’s Bernard Arnault and Amazon’s Jeff Bezos.
Much of Musk’s wealth and influence comes from the cohort of companies he cofounded and leads including Tesla and SpaceX, as well as the social media firm, X, which he controversially acquired in 2022 and hopes to turn into an “everything app” to rival the likes of China’s WeChat.
