According to media reports citing sources, Elon Musk’s artificial intelligence startup xAI is negotiating to raise up to $6 billion to challenge industry leader OpenAI. In recent weeks, xAI has been courting wealthy people and investors around the world, with Musk hoping to raise up to $6 billion in new equity for xAI at a proposed valuation of $20 billion, people familiar with the matter said. Negotiations are ongoing and Musk is sounding out investors' interest in the investment.
It is reported that Musk’s negotiating partners include investors from Hong Kong, Japan and South Korea, and he has also set his sights on sovereign wealth funds in the Middle East.
Morgan Stanley, which helped Musk leverage the buyout of social media platform Twitter (now renamed X) in 2022, is currently coordinating financing activities, people familiar with the matter said.
Musk is a co-founder of OpenAI, a company he founded in 2015 with OpenAI CEO Sam Altman and others. However, Musk left OpenAI in 2018. Media reports said Musk had conflicts with other OpenAI management, including over his stance on artificial intelligence safety, which ultimately prompted him to leave the company.
In July last year, Musk officially announced the establishment of his own artificial intelligence company. The company's team comes from OpenAI, DeepMind and other top artificial intelligence research companies.
xAI's December filing with the U.S. Securities and Exchange Commission (SEC) revealed that the company was seeking to raise $1 billion from equity investors. The filing showed that xAI had raised $135 million from Target at the time.
xAI released a chatbot called Grok last year. Grok is being trained using social media posts on X, giving it more up-to-date answers than its competitors.
It is worth mentioning that media reports last month stated that OpenAI was in the process of negotiating a new round of financing, with a target valuation of more than US$100 billion.