Elon Musk’s AI startup, xAI, is set to raise a substantial amount of funding in its latest round, aiming for a valuation of $20 billion in direct competition with OpenAI. The Financial Times reports that negotiations are currently underway, with xAI seeking to secure $6 billion from global investors, including family offices in Hong Kong.
According to insiders familiar with the matter, the fundraising efforts involve engaging sovereign wealth funds in the Middle East, as well as potential investors in Japan and South Korea. Morgan Stanley is reportedly coordinating the funding round, although the bank declined to comment on the matter.
OpenAI, a major AI startup, has already raised around $13 billion, mainly from Microsoft. It is also preparing for a new significant funding round. Another prominent AI startup, Anthropic, has received approximately $6 billion in investment from Google and Amazon.
In recent news, xAI has managed to secure $500 million in investor commitments out of a target of $1 billion. Investors in the company include Larry Ellison, Sequoia Capital, Andreessen Horowitz, Fidelity Management & Research Co., and Saudi Prince Alwaleed bin Talal. It is expected that these investors will collectively own 25% of xAI.
Bloomberg’s sources reveal that xAI intends to provide its equity investors in X (the parent organization) with the opportunity to invest in xAI for at least 25% of the amount they invested in X. Additionally, some parties are contemplating acquiring computing power alongside or instead of xAI shares. Final terms are expected to be negotiated in the coming weeks.
In response to these reports, Elon Musk has labeled the news from Bloomberg as fake, without specifying which aspects are inaccurate. The specifics of Musk’s statement are unclear at this time.
These developments demonstrate the growing rivalry in the AI sector, with industry players vying for substantial investments to fuel further advancements in artificial intelligence technology. By securing significant funding, xAI aims to position itself as a key player in this competitive landscape, challenging the dominance of Microsoft’s OpenAI.
