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Thursday, July 25, 2024

Elon Musk’s xAI Gets $6B Investment from Valor, a16z, Sequoia

Elon Musk’s AI startup, xAI, has successfully raised $6 billion in a Series B funding round, one of the largest deals in the burgeoning AI sector, as it seeks to bolster its competitive edge against rivals such as OpenAI, Microsoft, and Google.

The funding round included investments from prominent backers like Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity, Prince Alwaleed Bin Talal, and Kingdom Holding, according to a blog post by xAI.

This funding aligns with earlier reports by TechCrunch from April, which indicated that xAI was in the process of securing $6 billion, aiming for an $18 billion valuation. Musk confirmed that the investment round indeed valued xAI at $18 billion pre-money.

As an early and influential figure in the AI industry, Musk leads Tesla, the top electric vehicle manufacturer known for its self-driving technologies. He is also a co-founder of OpenAI, though his relationship with the company has soured. In March, Musk sued OpenAI and its co-founder Sam Altman, accusing them of deviating from their original mission and becoming a “closed-source de facto subsidiary” of Microsoft. Additionally, Musk has criticized Google for allegedly incorporating bias into its AI products.

xAI, established last year and spun out from the social network X, launched its ChatGPT-rival, the Grok 1.0 model, in November. The model was made available to Premium+ users on X for $16 a month. In April, xAI released the Grok 1.5 model, also accessible to Premium users on X, and previewed Grok’s multimodal capabilities. While xAI has open-sourced the Grok model, it has not released any training code.

The funds from this latest round will be used to bring xAI’s first products to market, develop advanced infrastructure, and accelerate research and development of future technologies. The company is also exploring partnerships to extend Grok’s reach beyond X.

xAI claims its goal is to develop “truthful” AI systems, although there have been reports of Grok’s news summary feature generating misleading information.

Lillian Hocker
Lillian Hocker
Lillian Hocker is a seasoned technology journalist and analyst, specializing in the intersection of innovation, entrepreneurship, and digital culture. With over a decade of experience, Lillian has contributed insightful articles to leading tech publications. Her work dives deep into emerging technologies, startup ecosystems, and the impact of digital transformation on industries worldwide. Prior to her career in journalism, she worked as a software engineer at a Silicon Valley startup, giving her firsthand experience of the tech industry's rapid evolution.

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