Musk’s AI startup X.AI to raise $6 billion in funding at a proposed valuation of $20 billion
Elon Musk’s AI startup, xAI, is reportedly in discussions to secure up to $6 billion in funding, with a proposed valuation of $20 billion, as Musk seeks to rival OpenAI, the Financial Times reported on Friday. If successful, this funding round would be among the largest ever seen in AI, surpassing OpenAI’s $5.8 billion raise in 2022.
X.AI will use the new capital injection to fuel the development of its general artificial intelligence (AGI) technology, aiming to achieve intelligence comparable to that of humans.
According to sources familiar with the matter, the startup has engaged in talks with family offices in Hong Kong and is targeting sovereign wealth funds in the Middle East for investment. Musk has also reached out to investors in Japan and South Korea.
Morgan Stanley is said to be coordinating the fundraising efforts, following its involvement in financing Musk’s acquisition of the social media platform X (formerly Twitter). Last week, Musk denied a report claiming xAI had secured $500 million in commitments towards a $1 billion funding goal.
If the $6 billion funding is secured, it would significantly surpass xAI’s initial $1 billion goal, as indicated in a filing with the U.S. Securities and Exchange Commission the previous month. While xAI’s $20 billion valuation would be a fraction of OpenAI’s, it aligns with other peers like Google-backed Anthropic.
The news of the funding comes at a time when the AI landscape is witnessing heightened competition, with substantial investments from various stakeholders aiming to capitalize on the recent surge of interest in Silicon Valley.
For now, OpenAI, backed by Microsoft and other tech giants, currently holds a leading position in the AGI race with models like ChatGPT and GPT-3. However, xAI’s substantial funding goal signals a potential challenge to OpenAI’s dominance and could expedite AGI technology development.
Despite xAI remaining secretive about its technology and team, the advancement of AGI technology raises concerns about its ethical and societal implications, sparking ongoing discussions within the industry. Some experts believe achieving true AGI is still years away, while others express more optimism about the timeline.xAI engages in collaborative work with Tesla and various other companies.
In July, Elon Musk launched xAI with the ambitious aim of unraveling the mysteries of the universe. The team behind xAI comprises experts from esteemed institutions such as Google’s DeepMind, OpenAI, Google Research, Microsoft Research, Tesla, and other renowned AI research firms. Their collective expertise has contributed to groundbreaking projects like DeepMind’s AlphaCode and OpenAI’s cutting-edge chatbots, including GPT-3.5 and GPT-4.
Musk appears to be positioning xAI as a direct competitor to established players in the field, such as OpenAI, Google, and Anthropic, known for their development of influential chatbots like ChatGPT, Bard, and Claude.
Notably, Musk co-founded OpenAI, the company responsible for ChatGPT, back in 2015, but he distanced himself from its board in 2018. Over time, he voiced criticisms of Big Tech’s AI initiatives and concerns about censorship. Earlier this year, Musk announced plans for a truth-oriented AI designed to grasp the fundamental truths of the universe, setting the stage for competition with Google’s Bard and Microsoft’s Bing AI.
The first whispers about xAI emerged in April, with reports surfacing in The Financial Times. It was also revealed that Musk had procured a substantial number of GPU processors from Nvidia, potentially to fuel a large-scale language model for xAI. In a taped interview on Fox News Channel during the same month, Musk unveiled his vision for a new AI tool called “TruthGPT,” expressing apprehensions about existing AI systems being excessively fixated on political correctness.
While Musk’s ventures, X and xAI, are distinct entities, they maintain a close collaborative relationship. Furthermore, xAI actively collaborates with Tesla and various other companies to advance its AI research and development endeavors.