Elon Musk’s xAI, a start-up in artificial intelligence, has received new funding from Silicon Valley venture capitalists Lightspeed Venture Partners and Andreessen Horowitz. Sequoia Capital, Tribe Capital and Sequoia Capital have also backed the company.
According to sources familiar with the negotiations, investors have agreed to join xAI’s latest financing round in which Musk hopes to raise $6bn.
One investor in the round stated that the Tesla and X CEO is still “a few hundreds million dollars” away from the target.
Lightspeed, Tribe, and Sequoia have declined to make any comments. Andreessen Horowitz, Musk and others did not reply to our request for comment.
Musk is attempting to get ahead of the market leaders OpenAI and Anthropic, which all have more powerful generative AI than xAI.
He tells investors that xAI will gain traction thanks to its connections with the other companies he runs — who could provide the startup with technology, data, and early revenues as customers.
The new funding would allow xAI to reach a valuation of $24bn, or “post-money”, once all the new investments are taken into consideration. It will also help the startup develop new versions Grok’s chatbot.
Musk was co-founder of OpenAI until he left in 2018, following disagreements over the direction of research with CEO Sam Altman. Since then, has sued OpenAI, Altman and the company, alleging that they compromised the original mission of the start-up to build AI systems in the interest of humanity. OpenAI dismissed the lawsuit as frivolous.
Musk also pledged to be more transparent than OpenAI in his pursuit of artificial intelligence general — the point where machines are able to think better than humans.
He also pledged to build “maximum AI truth-seeking”, criticising models he believes are politically correct.
Musk’s pitch convinced one investor, but he cautioned xAI that it is “behind its competitors.” The person said that in order to catch-up, you would need to invest billions of dollars into H100 [chips] as well as infrastructure.
During xAI’s fundraising, investors such as Sequoia, Andreessen, and others who have supported Musk in the past, including X, SpaceX and X, were granted first refusal and could acquire up to 25 percent of the shares.
One Silicon Valley investor said that a large part of the funding was sourced through banks and special-purpose vehicles, even outside the US.
One investor said he was concerned that investors who raised concerns about Musk’s other companies had been excluded from the xAI round of funding.
The person stated, “I’m not concerned about our investment because the team behind xAI are really good. But I’m concerned about the approach.” It’s not Silicon Valley, and it’s certainly not inclusive.
In January, it was reported that and xAI were in discussions about raising as much as 6bn.
Morgan Stanley was instructed to coordinate discussions with potential investors worldwide, including sovereign wealth fund, family offices, and retail investors from the Middle East and Hong Kong.
Musk stated in a X post at the time: “xAI does not raise capital, and I have never had any conversations in this regard.”
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.