Elon Musk’s AI startup xAI closes in on $6B funding round backed by Andreessen Horowitz at $18 billion valuation
Nickie Louise
Posted On May 24, 2024
Early this month, we reported that Elon Musk’s AI startup, x.AI was nearing a deal to raise a massive $6 billion in a new funding round that would catapult the company’s valuation to a staggering $18 billion. The story was based on a report from Bloomberg. Now, the Financial Times is reporting that xAI may be closer to securing the funding.
On Thursday, the Financial Times (FT) reported that xAI is closer to raising close to $6 billion in a funding round after securing new backing from Andreessen, Lightspeed, Sequoia, and Tribe. “Billionaire’s artificial intelligence start-up closes in on $6bn funding round as it seeks more financial firepower.” The round also includes participation from Sequoia Capital and Tribe Capital, the report added.
“Elon Musk’s xAI has secured new backing from Silicon Valley venture capital giants Lightspeed Venture Partners, Andreessen Horowitz, Sequoia Capital and Tribe Capital, as the tech billionaire closes in on a funding round valuing the artificial intelligence start-up at $18bn. The investors have committed to joining xAI’s latest financing in which Musk is seeking to raise close to $6bn, according to people familiar with the negotiations,” FT reported, citing people familiar with the ongoing negotiations.
xAI is the latest in a series of AI startups raising billions in funding as the generative AI race heats up. Early this week, Scale AI, another generative AI startup backed by Nvidia, raised a massive $1 billion in a growth funding round led by venture capital firm Accel, with participation from Amazon, Nvidia, and Meta.
If the $6 billion jackpot materializes, it would dwarf x.AI’s initial fundraising target of $1 billion, as disclosed in a filing with the U.S. Securities and Exchange Commission the month prior. While x.AI’s $20 billion valuation pales in comparison to behemoth OpenAI’s, it falls in line with peers like Anthropic, backed by the likes of Google.
Musk unveiled x.AI’s grand entrance last July, touting its mission to unravel the cosmos’s enigmas. The team, assembled just ten months ago, boasts luminaries from tech titans like Google’s DeepMind, OpenAI, Microsoft Research, and Tesla, who’ve spearheaded groundbreaking projects such as DeepMind’s AlphaCode and OpenAI’s state-of-the-art chatbots, including GPT-3.5 and GPT-4.
Simultaneously, Musk appears to be positioning x.AI as a heavyweight contender against established players like OpenAI, Google, and Anthropic, renowned for their game-changing chatbots like ChatGPT, Bard, and Claude.
Although Musk co-founded OpenAI in 2015, he distanced himself from its board in 2018, gradually voicing skepticism toward Big Tech’s AI ventures and expressing censorship apprehensions. Earlier this year, Musk set the stage for a showdown by announcing plans for a truth-centric AI, poised to uncover the universe’s fundamental truths, pitting him against Google’s Bard and Microsoft’s Bing AI.
