Elon Musk’s xAI Seeks $6 Billion to Compete with OpenAI

In a development reported by the Financial Times, xAI, spearheaded by entrepreneur Elon Musk, is actively engaged in discussions to secure $6 billion from a global consortium of investors, which includes prominent family offices based in Hong Kong.

This move underscores xAI’s ambition to position itself as a formidable contender in the competitive landscape alongside industry giants such as Microsoft and OpenAI.

The Financial Times has gleaned insights from three credible sources with direct knowledge of the matter, all of whom affirm that these negotiations are currently in progress but are subject to change.

Elon Musk is said to be steadfast in his pursuit of a $20 billion valuation for xAI. In pursuit of this objective, Musk has reached out to sovereign wealth funds situated in the Middle East, alongside prospective investors hailing from Japan and South Korea. Acting as the organizer for this fundraising, Morgan Stanley’s involvement is reported; however, the bank has refrained from providing official comments on the matter.

Meanwhile, xAI’s rival OpenAI, the popular ChatGPT maker, has secured a staggering sum of approximately $13 billion, with Microsoft serving as its primary investor. Furthermore, OpenAI is said to be in the process of gearing up for a substantial new funding round, indicative of its continued growth ambitions.

In a parallel development within the domain of large language model (LLM) startups, Anthropic has emerged as a significant player, having successfully garnered an impressive investment of approximately $6 billion. This financial backing is attributed to major tech players, Google and Amazon.

More recently, xAI achieved a noteworthy milestone by garnering investor commitments totaling $500 million, a significant step towards its ambitious funding target of $1 billion. The valuation during these discussions falls within the range of $15 billion to $20 billion.

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