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Elon Musk’s xAI Aims to Raise $6 Billion

Jan 26, 2024 - pymnts.com
Elon Musk's AI startup, xAI, is reportedly seeking to raise $6 billion in funding to compete with Microsoft-backed OpenAI. The company aims to secure this capital at a proposed valuation of $20 billion. Musk has been engaging with wealthy individuals and investors globally, including family offices in Hong Kong, sovereign wealth funds in the Middle East, and investors in Japan and South Korea. However, raising funds in Hong Kong may face political challenges due to rising geopolitical tensions and US-imposed export controls on Chinese AI.

xAI, which launched its first product, a chatbot named Grok, in November, needs substantial funding due to the costs associated with developing generative AI models. These models are capable of producing human-like text, images, and code within seconds. OpenAI, xAI's rival, has already secured approximately $13 billion from Microsoft. Other AI startups like Anthropic and Cohere have also raised billions from major tech companies and venture capital groups. In December, xAI indicated its intention to raise $1 billion in funding from equity investors, having already raised nearly $135 million.

Key takeaways:

  • Elon Musk's AI startup, xAI, is reportedly in talks with global investors to raise $6 billion in funding to compete with Microsoft-backed OpenAI.
  • The company aims to secure fresh equity capital at a proposed valuation of $20 billion.
  • xAI's first product is a chatbot named Grok, which has real-time knowledge of the world due to being trained on the X platform.
  • In December, xAI filed documents with the SEC, indicating its intention to raise $1 billion in funding from equity investors, having already raised nearly $135 million.
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