Elon Musk's xAI Aims for $6B Funding to Challenge OpenAI | Coinspeaker

Elon Musk’s xAI Aims for $6B Funding to Challenge OpenAI

UTC by Chimamanda U. Martha · 3 min read
Elon Musk’s xAI Aims for $6B Funding to Challenge OpenAI
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Financial Times said the upcoming investment round is anticipated to be led by Morgan Stanley.

Elon Musk’s artificial intelligence startup xAI is actively seeking an ambitious $6 billion in funding from global investors, as reported by the Financial Times, citing sources familiar with the matter.

The proposed fundraising could potentially elevate the company’s valuation to $20 billion, positioning it as a robust competitor to Microsoft-backed OpenAI, Anthropic, and Cohere.

Elon Musk in Talk with Potential Investors

Insiders familiar with the matter revealed that Musk is presently in discussions with potential investors, including family offices in Hong Kong, sovereign wealth funds in the Middle East, and interested parties in Japan and South Korea.

Musk’s strategic approach to potential geopolitical challenges is evident in the diverse geographical scope of his investment targets, notably seen in Hong Kong amid rising tensions due to US export controls aiming to restrict China’s technological advancements.

The planned fundraising comes a few days after Bloomberg reported that xAI received $500 million in funding as part of the company’s $1 billion investment goal. However, the billionaire entrepreneur denied the report, describing it as false and misleading.

Despite Musk’s denial of the report,  the artificial intelligence firm had previously disclosed its intention to raise $1 billion in an equity offering, according to a filing with the United States Securities and Exchange Commission (SEC).

While there is uncertainty regarding whether the company has successfully secured the funds, the ongoing discussions and the potential $6 billion fundraising emphasize the substantial financial requirements for advancing generative AI models. The development of these tools requires substantial computing power, extensive datasets, and cutting-edge chip technologies.

Morgan Stanley to Led the Upcoming Investment Round

Financial Times said the upcoming investment round is anticipated to be led by Morgan Stanley, a prominent financial services company in the US. The American bank had previously contributed towards the $44 billion acquisition of Twitter, now known as X, in 2022.

xAI was launched in July 2023 amidst a surge in the artificial intelligence sector. The surge in interest and investment in the AI sector has been notably marked by the success of OpenAI’s ChatGPT and recent fundraising feats by Google-backed Anthropic and Microsoft-backed Inflection AI.

To rival ChatGPT,  xAI rolled out its first product named Grok in November of the same year to rival OpenAI’s success. The tool shares similar characteristics with  ChatGPT.

The company’s debut was accompanied by Musk’s critique of competitors, accusing them of insufficient focus on safety measures and unwarranted censorship in their AI products. Since its launch, the billionaire entrepreneur has consistently advocated for the responsible development of AI.

Meanwhile, Musk left OpenAI in 2018 due to disagreements with the company’s CEO Sam Altman before launching xAI.

Artificial Intelligence, News, Technology News
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