Elon Musk's enterprise, xAI, is reportedly in discussions to secure a substantial funding round of up to $6 billion, proposing a valuation of $20 billion. This move signals Musk's ambitious endeavor to make a significant impact in the competitive field of artificial intelligence (AI), potentially challenging established players like OpenAI.
As disclosed by the Financial Times on Friday, xAI is actively engaging with sovereign wealth funds in the Middle East and exploring potential partnerships with family offices in Hong Kong as part of its fundraising efforts.
This reported funding initiative reflects the heightened activity in the ongoing race for supremacy in the AI sector, with investors across various sectors pouring substantial investments into firms seeking to capitalize on the increasing interest in AI technology, particularly in Silicon Valley.
While xAI had initially declared its intent to raise $1 billion in a filing with the US Securities and Exchange Commission last month, the current prospective fundraise of $6 billion surpasses that initial goal.
Although OpenAI's valuation of $20 billion remains dominant, xAI's position is comparable to other industry players like Anthropic, backed by Google.
According to sources, Musk has reached out to investors in South Korea and Japan to garner support for the fundraising campaign. The significant effort is reportedly being orchestrated by Morgan Stanley, leveraging its association with Musk's acquisition of the social media network X (formerly known as Twitter).
Contrary to reports, Musk refuted claims last week that xAI had secured $1 billion in financing and received $500 million in commitments from investors.
The Tesla CEO, who departed OpenAI's board in 2018, despite co-founding the company in 2015, has been vocal about his commitment to developing AI with a focus on safety.
xAI gained attention last year with the launch of "Grok," a chatbot positioned as a competitor to OpenAI's ChatGPT. Musk consistently emphasizes the importance of responsible AI development and recently issued a caution against advancing robotics and AI initiatives outside of Tesla until he attains more voting power within the electric vehicle company. Musk expressed concerns about steering Tesla into the AI space without securing a 25% voting stake.
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