Elon Musk is seeking $4 billion as investment in his AI venture xAI, hoping to take on OpenAI

Tech mogul Elon Musk the brains behind the X-linked AI chatbot Grok and xAI, is seeking to raise a staggering $4 billion in funding in hopes of taking on OpenAI and capturing a section of the tech infrastructure that is needed to run an AI company.

According to a Bloomberg report, Musk is trying to convince and court a few investors using special purpose vehicles (SPVs), allowing multiple venture capital firms and individuals to pool their investments into a single entity.

While this approach offers collaborative investment opportunities, it comes with upfront fees of up to 5 per cent, along with ongoing management fees and interest. SPV structures allow different venture capital firms and individuals to invest together as a single entity.,

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Musk’s ambitious fundraising plans could potentially value xAI at a jaw-dropping $18 billion post-funding round, with the company expecting to secure the capital within the next 2–3 weeks on a first-come, first-served basis.

Founded by Musk in March 2023 and officially launched in July of the same year, xAI is headquartered in the bustling tech hub of the San Francisco Bay Area. The company has set its sights high, aiming to unravel the mysteries of the universe.

In November, xAI unveiled its flagship product, the X-linked chatbot Grok, which claimed to have superior capabilities compared to ChatGPT, which has become the gold standard when it comes to text-based GenAI.

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The xAI pitch to investors calls on Musk’s successful track record at Tesla and the AI model’s training on data sourced from his own microblogging network, X.

Behind the scenes, xAI employs a team of AI tutors spanning diverse fields, tasked with generating and curating top-tier data to train and refine its models.

Despite its multibillion-dollar valuation, xAI remains a relatively lean operation, boasting just 10 full-time engineers and a modest fleet of between 5,000 and 10,000 GPUs, according to reports.

While xAI aims to challenge industry stalwarts with its open-source approach to AI chatbots, it faces stiff competition in a crowded marketplace, including rivals like OpenAI’s ChatGPT, Antropic’s Claude, Microsoft’s Copilot, Google’s Gemini, and Meta AI.

(With inputs from agencies)