Elon Musk's AI startup xAI said today it has raised $6 billion in a new funding round, one of the biggest deals in the hotly anticipated emerging space as it ramps up cash to aggressively compete with rivals like OpenAI, Microsoft, and Google.
Backers who invested in xAI's Series B funding include Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity, Prince Alwaleed Bin Talal and Kingdom Holding, the startup said in a blog post.
The funding confirms a TechCrunch report from April that xAI was looking to raise $6 billion. At the time, TechCrunch reported that the company was finalizing a round that would have valued it at $18 billion. xAI was founded last year and spun out of social network X, in which X also invested.
Musk confirmed that the investment round valued the company at $18 billion pre-money.
Pre-money valuation is $18 billion
— Elon Musk (@elonmusk) May 27, 2024
Musk is one of the earliest and best-known entrepreneurs in the AI field. His automaker, Tesla, is the leading EV manufacturer with self-driving technology. He is also co-founder of OpenAI, a startup that he has invested tens of millions of dollars into. Musk's love for OpenAI has since faded. In March, he sued OpenAI and its co-founder Sam Altman for violating the company's mission statement and becoming a “closed-source de facto subsidiary” of Microsoft. He has also accused Google of incorporating biased code into its AI products.
A year after founding xAI, Musk released the Grok 1.0 model, a chatbot rival to ChatGPT, in November. The company then made the model available to X's Premium+ users (who pay $16 per month) through a chatbot. In April, it released the new Grok 1.5 model, granting X's Premium users access to the chatbot as well. Additionally, the Musk-owned company previewed Grok's multimodal capabilities in April. Earlier this year, the company open-sourced the Grok model, but without the training code.
xAI plans to use the new funding round to bring its first suite of products to market, build out advanced infrastructure, and accelerate research and development of future technologies, the company said in a blog post. The company will likely seek partnerships to introduce Grok to users outside of X.
The company claims to be aiming to develop a “truthful” AI system, but X's Grok news summarization feature has been reported to cause hallucinations and generate misleading information.