OpenAI challenger:Elon Musk closes funding for xAI

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Elon Musk’s artificial intelligence startup xAI has closed a $6 billion funding round at an $18 billion valuation as investor enthusiasm for the new OpenAI challenger continues.

Despite being just over a year old, xAI’s funding puts it in the richest tier of potential rivals to Microsoft-backed OpenAI. Which has secured more than $13 billion in funding. In terms of capital raised, xAI now ranks alongside Anthropic, which has raised more than $8 billion since its inception in 2021.

Musk co-founded OpenAI before parting ways with its CEO Sam Altman in 2018.

Investors in xAI’s new round include many of Musk’s staunchest backers, including Kingdom Holding. A Saudi investor led by Prince Alwaleed Bin Talal, Dubai-based Valor Equity Partners and Vy Capital. As well as Silicon Valley firms Andreessen Horowitz and Sequoia Capital.

The same investors previously backed Musk’s $44 billion acquisition of Twitter in 2022. The AI ​​startup’s Grok chatbot is tightly integrated with Musk’s social media platform. Now called X, giving it access to a real-time data stream and large audience . potential users.

OpenAI

Assembling the talent and computing power needed to build large AI models comes at a high price. Nvidia, the dominant supplier of chips needed to train AI systems, reported a 262 percent jump in revenue. Last week as demand continues to outstrip supply for its latest processors. The world’s most valuable companies—including Microsoft, Google. Meta—are all racing to expand their AI capabilities, investing billions in the data center infrastructure needed to build and operate them.

However, investors still see opportunities for new entrants and alternative approaches to building large language models. The AI ​​systems that power Grok and ChatGPT. The xAI deal comes as Paris-based Mistral, which was founded a year ago, is closing in a fresh €500m round at a €5bn valuation. According to people familiar with the talks.

The deal gives xAI a so-called post-money valuation of $24 billion, once the new investment is taken into account.

The company said it has “made significant progress” in a short period of time, including adding imaging capabilities to Grok, which was released in November.

“xAI will continue this steep trajectory of progress in the coming months. With several exciting technology nd product updates to be announced soon. The California blog said late Sunday. “Funds from the round will be used to bring the first xAI products to market, build advanced infrastructure, and accelerate research and development of future technologies.”

The Company’s Mission

He added: “The company’s mission is to understand the true nature of the universe.”

Musk pitched Grok as a “maximum truth-seeking” alternative to what he sought to portray as “politically correct” rivals ChatGPT and Google’s Gemini.

Backers of Musk’s other ventures, including X and SpaceX, were the first to decline to back xAI. People familiar with the talks told the Financial Times last week.

Investors who raised questions about problems in Musk’s other businesses were shut out of xAI’s funding round, one attendee said.

The FT first reported in January that xAI was in talks to raise up to $6 billion. At the time, Musk said in a post on X: “xAI is not raising capital and I have not spoken to anyone about that.