xAI Ventures, a rival to Elon Musk’s OpenAI in the artificial intelligence sector, is close to completing a $6 billion funding round. The social network X is already an investor in xAI. Before the investment, xAI is valued at $18 billion, and investors will own 25% of the company. The deal is likely to be finalized in the next few weeks, unless there are any alterations to the agreement.
Changes have been made to the agreement details once in the past. Recently, Jared Birchall, who is in charge of Musk’s family office, told potential investors that xAI was planning to raise $3 billion with a valuation of $15 billion before any additional funds were raised. However, due to a surge in investor interest, these numbers were quickly adjusted.
Our source informed us via email that the new price is $6 billion out of the total $18 billion. We were advised not to object to this price change as there are numerous other interested parties looking to participate.
Investors who have been pushing to participate in the deal for a while were unfazed by the delay. Sequoia Capital and Future Ventures, a venture fund co-founded by Steve Jurvetson, who has a close relationship with Musk, will be contributing to the funding round.
Other potential investors in the project could be Valor Equity Partners and Gigafund, both of which have strong ties to Elon Musk. Elon Musk is famous for mixing his personal and professional lives. We were unable to reach out to these investors as xAI does not have a specific press team.
Jurvetson serves as a member of the board for SpaceX and was a board member for Tesla until 2020. Luke Nosek, who co-founded Gigafund and previously co-founded Founders Fund with Peter Thiel, was the initial venture investor for SpaceX and has been on its board ever since. Antonio Gracias, the founder of Valor, was an early investor in Tesla and, similar to Jurvetson, was a former director at Tesla and is currently on the board of SpaceX.
The promotional content for xAI has made it clear that their objective is to connect the digital world with the physical world. What many people may not be aware of is that Musk plans to accomplish this by gathering data from all of his companies, including Tesla, SpaceX, the Boring Company, and Neuralink, which focuses on developing computer interfaces for insertion into human brains.
X is a social media platform owned by Elon Musk. Recently, they introduced a chatbot named Grok, created by xAI, as a paid feature for users. Musk envisions building a vast virtual ecosystem on the platform, which he has discussed with investors.
Taking Grok as a case study, X plays the role of a customer as well as a significant distributor for Grok. The concept is that in the coming years, Grok will be able to access data from Musk’s other companies, leading to advancements in different areas, starting with the development of fully autonomous vehicles.
A possible beneficiary of these technological advancements could be Tesla’s humanoid robot, Optimus. While Optimus is still in the development phase, Musk indicated to analysts that it may be able to perform tasks in Tesla’s factories by the end of the year. Even if this timeline is ambitious, these advanced robots could surpass expectations in terms of their abilities and productivity if Musk’s plans are successful.
At the moment, X is the primary beneficiary of the increasing interest in xAI. Even though X has encountered obstacles and decreased in value after being taken over by Musk, it still has a share in xAI. As a result, X stands to gain financially from any achievements that xAI achieves.
It is unclear how OpenAI will be affected, as it was the fastest growing startup in history last year. Musk has been dedicated to OpenAI since the company experienced rapid expansion following the introduction of its ChatGPT chatbot.
In 2015, Elon Musk played a role in founding OpenAI, but he later decided to leave the board in 2018 because of disagreements about the organization’s goals. Originally a nonprofit, OpenAI later became a for-profit company. Musk has publicly criticized Sam Altman, a cofounder of OpenAI, and made jokes about the organization, even suggesting it should be called ClosedAI instead.
Last month, Musk made the design of xAI’s initial chatbot “Grok-1” available as open source, giving people the ability to use and change it. Musk’s intention was to set his project apart from OpenAI, which has kept its algorithms confidential and is being sued by Musk.