Elon Musk’s XAI Engages in New Fundraising Discussions

Xai, an AI startup founded by Elon Musk, is currently negotiating new funding that could elevate its valuation to between $80 billion and $120 billion, a notable increase from just over a month ago.

Sources speaking on condition of anonymity indicated that these discussions are in the preliminary stages and the company’s valuation could fluctuate as negotiations continue. Investors are contemplating a potential investment of $20 billion in Xai, though this figure may vary.

These discussions come on the heels of significant fundraising efforts by OpenAI, the San Francisco-based startup that announced a fundraising round valued at $300 billion in March. The launch of ChatGPT in late 2022 sparked an AI boom, leading to substantial investments in various AI companies, including Xai.

Presently, Xai is linked to Musk’s social media venture, X. In March, Musk claimed to have sold X to Xai, stating that the trading of all shares valued Xai at $80 billion and X at $33 billion. Xai’s earlier valuation from a funding round in December was approximately $40 billion.

Grok, a chatbot developed by Xai, is trained using data from X users and is accessible via the platform. According to X’s banker, a segment of the social media company’s revenue is derived from Xai.

Interest in AI firms waned towards the end of last year as numerous notable startups merged with major tech companies like Google and Amazon. Despite this, Xai and OpenAI remain among the few seeking billions to develop crucial AI technologies.

Musk has not responded to inquiries regarding Xai. Previous reports have detailed the ongoing discussions, as mentioned by Bloomberg.

(The New York Times has sued OpenAI and its partner Microsoft over allegations of copyright infringement concerning news content related to AI systems.)

Musk, along with entrepreneur Sam Altman and others, co-founded OpenAI in 2015 but departed from the organization about two years later following a disagreement over its direction when it was still a non-profit entity.

After Musk’s exit from OpenAI, Altman transitioned it into a for-profit model, enabling the acquisition of the significant funding required to advance AI technologies that learn by analyzing vast amounts of digital data.

Following the launch of ChatGPT in 2022, Musk established Xai, creating similar technology. Concurrently, Musk filed a lawsuit against OpenAI, alleging that OpenAI and its founders, Altman and Greg Brockman, had violated the company’s incorporation agreement by prioritizing commercial interests over public benefit. Musk eventually withdrew the lawsuit in August after initially reviving it in federal court months earlier.