Elon Musk’s xAI Raises $500 Million in Funding Towards $1 Billion Goal
Elon Musk’s artificial intelligence company, xAI, has recently secured $500 million in commitments from investors on its way to reaching a $1 billion goal, according to sources familiar with the matter. The company is currently discussing a valuation of $15 billion to $20 billion, although these terms may still change in the coming weeks. Musk has not yet responded to requests for comments.
xAI was launched by Musk as an alternative to Open AI, a company he co-founded but later left due to philosophical differences about the monetization of the technology. The startup’s flagship product is a chatbot named Grok, which uses social media posts on X (formerly known as Twitter) as a source of data. This unique approach gives Grok access to more recent and up-to-date information compared to other chatbots.
Interestingly, investors in both xAI and Open AI are likely to overlap. Musk’s $44 billion takeover of Twitter was supported by prominent investors such as Larry Ellison, Sequoia Capital, Andreessen Horowitz, Fidelity Management & Research Co., and Saudi Prince Alwaleed bin Talal.
According to Musk, equity investors in X will own 25% of xAI. This means that those investors are invited to invest at least 25% of their initial investment in X into xAI. For example, if they invested $10 billion in X, they would be invited to invest $2.5 billion or more in xAI. Final terms are expected to be agreed upon in the next couple of weeks.
Additionally, some parties are exploring the option of obtaining computing power instead of or in addition to xAI equity shares. This would be particularly beneficial to venture firms’ portfolio companies, as they heavily rely on computational infrastructure in order to process data and develop new artificial intelligence products.
