On July 13, according to an exclusive report by the Wall Street Journal, informed investors revealed that Elon Musk’s SpaceX has agreed to invest US$2 billion in another of his companies, xAI, accounting for nearly half of xAI’s recent total equity financing.
Musk
The investment from SpaceX is part of xAI’s $5 billion equity round last month. This is SpaceX's first known investment in xAI and one of its largest investments in another company. SpaceX has also raised $5 billion in debt financing and expects to raise more later this year, investors said.
Musk continues to mobilize the resources of his business empire to support the development of xAI, which is working hard to catch up with OpenAI. Earlier this year, he merged xAI with X, integrating a small research lab with a social media platform that would help the Grok chatbot expand its reach. The merger values the new company at $113 billion.
According to the Wall Street Journal, SpaceX recently had more than $3 billion in cash reserves. The company rarely invests externally, and its one major external investment occurred in 2021, when it acquired a satellite communications company for US$524 million.
SpaceX's investment in xAI could bring it risks. Although SpaceX's revenue has grown significantly in recent years, the company is investing billions of dollars in developing a new rocket called Starship. The experimental aircraft is behind schedule and has suffered multiple setbacks this year, including three consecutive failed test flights and a massive explosion during an engine test last month.