Key Takeaways
- Elon Musk is raising up to $4 billion for xAI, aiming for a post-funding valuation of $18 billion;
- xAI is an AI startup with an open-source chatbot Grok, a direct competitor to OpenAI's ChatGPT;
- Despite its high valuation, xAI remains a small firm with 10 engineers and 5,000-10,000 GPUs.
Tesla's CEO Elon Musk is in the process of securing up to $4 billion in funding for his latest venture, xAI, an artificial intelligence (AI) startup.
The company, which debuted its open-source AI chatbot named Grok in November 2023, claims superior performance over competitors like OpenAI's ChatGPT.
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The funding pitch reportedly highlighted Musk's previous successes with companies like Tesla and his AI model's training on data from Musk's social media network, X (formerly Twitter).
Investors are invited to participate in the funding through special purpose vehicles (SPVs), a strategy that consolidates funds from various venture capitalists and private investors into one entity.
The goal is to secure between $3 billion and $4 billion, which could raise the company's value to $18 billion after the investment round. The company plans to raise the funds within the next two to three weeks "on a first come, first served basis."
Despite its high valuation, xAI remains a relatively small startup, employing only ten full-time engineers and operating between 5,000 and 10,000 GPUs.
Still, this funding round will not only finance innovation but also make a bold statement in a field crowded with strong competitors.
This interest in xAI highlights a broader trend of billions channeled into AI startups. Amazon has recently increased its investment to $4 billion and secured a minority stake in Anthropic, the developer of AI chatbot Claude.
