Looks like Elon Musk is trying to mount a challenge to OpenAI—with some serious funding behind it. His competitor xAI is reportedly in talks to raise up to $6 billion at a proposed valuation of $20 billion, the Financial Times reported on Friday (Jan. 26).
Musk has reportedly been in discussion with family offices in Hong Kong and is targeting sovereign wealth funds in the Middle East for the funding, people familiar with the matter told the publication.
The new fundraising figure is much higher than the $1 billion xAI had set as its target goal last month, according to a filing with the US Securities and Exchange Commission. So far, xAI has raised $135 million of its total goal.
Last week, Musk tweeted that a report that his xAI startup had secured $500 million in commitments from investors toward the $1 billion goal is inaccurate.
xAI lags OpenAI’s valuation, but meets Anthropic’s
Last November, xAI launched AI chatbot Grok, which is trained on information pulled from X, to rival OpenAI’s ChatGPT. Grok is designed to “answer questions with a bit of wit” and “a rebellious streak.” The company says not to use it “if you hate humor.”
xAI’s valuation of $20 billion is still a fraction of OpenAI’s, although the former’s valuation is in line with Anthropic’s $18 billion.
A clubby tech circle
While overall startup funding is down, AI remains a bright spot. Global funding for AI startups hit $50 billion in 2023, up 9% from the year before, according to market research firm Crunchbase. And tech leaders want in.
Turns out Parag Agrawal, who was briefly CEO of Twitter before Elon Musk took over the social media platform, has reportedly raised about $30 million for an AI startup of his own. The company is reportedly building software for developers of large-language models (LLMs), which power chatbots. Meanwhile OpenAI chairman Bret Taylor—once the co-CEO of Salesforce and the chairman of the board of Twitter—is close to finalizing new investment, led by VC firm Sequoia Capital, which would value his AI company at $1 billion, Bloomberg reported Thursday, Jan. 25.