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Wednesday February 21, 2024

Elon Musk's xAI eyes funds worth billions to challenge rival OpenAI

Elon Musk's xAI is actively pursuing money from sovereign wealth funds in Middle East

By Web Desk
January 26, 2024
Elon Musk gestures during a gathering. — AFP/File
Elon Musk gestures during a gathering. — AFP/File

Elon Musk's business, xAI, is reportedly in talks to acquire a significant funding round of up to $6 billion, with a proposed valuation of $20 billion, in an attempt to transform the artificial intelligence (AI) landscape.

This information, which was made public by the Financial Times on Friday, indicates Musk's resolve to make a big name for himself in the AI space and maybe challenge more seasoned competitors like OpenAI.

According to people familiar with the situation, xAI is actively pursuing money from sovereign wealth funds in the Middle East and has been interacting with family offices in Hong Kong. 

The reported fundraising campaign marks a significant uptick in the current AI race, with investors of all stripes investing large sums of money in firms hoping to take advantage of the growing interest in AI technology, especially in Silicon Valley.

Musk's xAI had previously stated in a filing with the US Securities and Exchange Commission last month that it intended to raise $1 billion. This prospective $6 billion fundraise exceeds that initial aim. Even if OpenAI's valuation of $20 billion still dwarfs that of xAI, it is comparable to other industry players like Anthropic, which is supported by Google.

According to the Financial Times, Musk has been contacting investors in South Korea and Japan to get assistance for the financing effort. In addition, reportedly, Morgan Stanley is organising this significant fundraising effort, drawing on its background as one of the financial organisations associated with Musk's purchase of the social media network X (formerly known as Twitter).

Musk denied last week that xAI had raised $1 billion in finance and received $500 million in commitments from investors. The businessman, who serves as CEO of Tesla, has made no secret of his desire to create AI that is safer. Musk left OpenAI's board in 2018, despite the fact that he co-founded the company in 2015.

With the introduction of "Grok," a chatbot positioned as an opponent to OpenAI's ChatGPT, xAI grabbed news last year. Musk has emphasised the significance of responsible AI development on a regular basis. Most recently, he issued a warning against advancing robotics and AI outside of Tesla until he obtains more voting power within the electric vehicle company. Musk expressed unease about steering Tesla into the AI space without having 25% of the vote.