xAI, Elon Musk’s rival to OpenAI’s ChatGPT, is all set to raise $6 billion on a pre-money valuation of $18 billion, as per a trusted source close to the deal. Sequoia Capital and Future Ventures, the venture fund co-founded by Musk’s friend Steve Jurvetson, will participate in the round.
Other investors to contribute to this investment include Valor Equity Partners and Gigafund. This deal will give investors a quarter of xAI and is expected to close in the coming weeks.
Notably, the $6 billion fundraising would be much higher than the $1 billion goal xAI had set last month in a filing with the US Securities and Exchange Commission. This follows Musk’s denial of raising $500 million in commitments from investors toward its goal.
The GenAI race
Since the launch of ChatGPT in 2022, the tech scene has been bustling with endeavours to create their versions of generative AI. Industry titans, including Google, Alibaba, and Meta are actively striving to develop their equivalents to ChatGPT. Startups like Anthropic, supported by a $300 million investment from Google, and Stability AI are also making significant advancements in this revolutionary domain.
Grok, a ChatGPT rival from xAI
Back in 2023, Elon Musk offered a preview of his company’s chatbot dubbed Grok, which is similar to ChatGPT. It was stated that the model has been trained with data collected from X bought by Musk for $44 billion in 2022.
As per Musk, Grok is both smarter and funnier than its rivals and can answer spicy questions that are rejected by most other AI systems. During its preview, Musk said that the xAI startup would be integrated into his social media platform X, and also be available as a standalone app.
Last month, Musk revealed the open-sourced architecture of xAI’s earliest chatbot Grok-1 so that anyone can download and alter it. This move was another part of his ongoing campaign to make it unique from OpenAI.
The tech titan started the company after tech giants continued to invest heavily in the Gen AI technology. Elon Musk started xAI in July after hiring researchers from OpenAI, Google DeepMind, Tesla, and the University of Toronto.
Earlier this month, Musk also warned about developing AI and robotics outside Tesla, unless he gets more voting control at the company. He said he would be uncomfortable building Tesla into an AI leader unless he had 25% voting control.
