Elon Musk’s artificial intelligence firm, xAI, has garnered $500 million in commitments from investors toward its $1 billion fundraising objective, sources familiar with the matter reported.
The company is engaged in discussions regarding a valuation ranging from $15 billion to $20 billion. However, terms remain subject to potential changes in the upcoming weeks, according to insiders who requested anonymity due to a lack of authorization to speak publicly about the investment. Musk contested the report on X, formerly Twitter, dismissing it as “fake news.”
Established as an alternative to Open AI, which Musk co-founded but later departed due to philosophical differences on technology profit strategies, xAI has introduced a chatbot named Grok. This AI entity is developed utilizing social media posts on X, a platform also owned by Musk, granting Grok access to more recent data compared to other chatbots.
Investors in both xAI and Musk’s $44 billion acquisition of Twitter are anticipated to overlap. This includes supporters such as Larry Ellison, Sequoia Capital, Andreessen Horowitz, Fidelity Management & Research Co., and Saudi Prince Alwaleed bin Talal.
In November, Musk stated that equity investors in X would possess 25% of xAI. In practical terms, this means these investors are invited to contribute at least 25% of their X investment in xAI. For instance, if they invested $10 billion in X, they are encouraged to invest $2.5 billion or more in xAI.
Musk and investors are anticipated to finalize terms in the coming weeks. Some stakeholders are exploring the possibility of obtaining computing power in addition to, or potentially instead of, xAI equity shares. This could be particularly advantageous for venture firms’ portfolio companies engaged in data-intensive processes for developing new artificial intelligence products.