The Information and TechCrunch have disclosed, based on undisclosed sources, that Elon Musk’s AI endeavor, xAI, is preparing for a significant funding drive in Silicon Valley. The venture aims to secure $6 billion at an $18 billion pre-money valuation, with expectations of finalizing the deal in the coming weeks.
Musk’s fledgling AI firm, established just ten months ago, aims to directly challenge OpenAI, a company he co-founded but openly criticized for shifting from a nonprofit, open model to a more profit-centric, secretive approach.
Musk and his associates have been actively courting investors, presenting xAI as a brand poised to integrate seamlessly with Musk’s other ventures, including Tesla, SpaceX, The Boring Company, and Neuralink. Their pitch emphasizes xAI’s unique proposition of “mastering the physical world,” envisioning a future where the AI platform leverages data from Musk’s diverse portfolio to assist in endeavors such as developing fully autonomous vehicles and advanced robotics.
Despite the recent tumult surrounding Musk, his entrenched connections within Silicon Valley seem to be greasing the wheels for xAI’s fundraising endeavors. Particularly noteworthy is the involvement of Future Ventures, co-established by Musk’s erstwhile associate Steve Jurvetson, in this funding cycle.
Nevertheless, it’s imperative to acknowledge that xAI’s flagship product, Grok, an AI chatbot embedded within Musk’s revamped social media platform X (previously known as Twitter), has come under fire for its lackluster performance. Grok’s inability to distinguish between genuine news and satire, coupled with its dissemination of misinformation, underscores glaring deficiencies in the AI’s functionality.
Nevertheless, Musk is leveraging the buzz surrounding xAI to bolster X’s prospects. With X holding a stake in xAI, Musk’s struggling social media venture stands to benefit from the success of its AI counterpart, despite ongoing challenges in revenue generation.
