Tech entrepreneur Elon Musk is in the process of raising up to $4 billion for his artificial intelligence (AI) startup xAI, the mastermind behind the X-linked AI chatbot Grok.
According to reports, select investors are being presented with the opportunity to participate in funding rounds for the AI startup through special purpose vehicles (SPVs), as detailed in an email sent to potential investors.
SPV structures enable different venture capital firms and individuals to invest collectively through a single entity. However, reports suggest that there are upfront fees of up to 5%, along with management fees and interest to be factored in.
Musk aims to raise $3 billion–$4 billion in a deal that could potentially value the company at $18 billion post-funding round completion. The firm anticipates securing the funds within the next 2–3 weeks on a first-come, first-served basis.
Founded by Musk in March 2023 and headquartered in the San Francisco Bay Area, xAI aspires to “understand the true nature of the universe.” The company launched its first product, the X-linked chatbot Grok, in November, claiming superiority over ChatGPT.
The email pitch emphasized key selling points for potential investors, including Musk’s successful track record at Tesla and the AI model’s training on data from Musk’s microblogging network X.
Entrepreneur and angel investor Mario Nawfal expressed concerns about an AI bubble as investments in AI startups surge, citing soaring valuations and high development costs.
xAI employs in-house AI tutors from diverse fields tasked with creating and curating high-quality data for model training and evaluation, according to its official website. Despite its multibillion-dollar valuation, xAI remains a small startup with limited staff and resources.
Grok competes in a crowded AI chatbot market, contending with rivals like OpenAI’s ChatGPT, Antropic’s Claude, Microsoft’s Copilot, Google’s Gemini, and Meta AI (formerly Facebook).
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