 "Musk reportedly offered 25 per cent of xAI shares to those who supported his $44 billion acquisition of Twitter (now X) to offset their losses. Among these investors are Oracle founder Larry Ellison, Twitter co-founder Jack Dorsey, and Saudi Arabia’s Prince Al Waleed bin Talal. Image Credit: Reuters")
Elon Musk’s AI venture, xAI, has made waves by raising an impressive $6 billion in its latest funding round. This brings the total amount raised by the company since its inception in July last year to $12 billion.
The massive funding reflects Musk’s ambition to compete directly with industry giants like OpenAI, which he co-founded before parting ways over creative differences.
xAI and its ambitions
Musk launched xAI seven years after leaving OpenAI, following a fallout with co-founders, including Sam Altman. He reportedly wanted OpenAI to develop at a faster pace to keep up with competitors like Google, a direction the company did not pursue. Musk’s reputation for scaling businesses quickly has helped xAI garner attention, despite entering the AI race later than rivals.
OpenAI, which has raised $17.9 billion since its founding in 2015, remains a formidable competitor. However, xAI is closing the gap rapidly, with Musk’s aggressive investments in infrastructure, such as expanding its “Colossus” supercomputer in Memphis, Tennessee. The supercomputer is set to grow from 100,000 Nvidia GPUs to over a million, a move that highlights Musk’s ambition to build cutting-edge AI capabilities.
Heavyweight investors join the fray
The latest funding round attracted contributions from 97 investors, with a minimum buy-in of $77,593. While the names of the contributors were not disclosed in the SEC filing, earlier reports suggest that existing investors, including Sequoia Capital, Andreessen Horowitz, Valor Equity Partners, and the Qatar Investment Authority, participated.
Additionally, Musk reportedly offered 25 per cent of xAI shares to those who supported his $44 billion acquisition of Twitter (now X) to offset their losses. Among these investors are Oracle founder Larry Ellison, Twitter co-founder Jack Dorsey, and Saudi Arabia’s Prince Al Waleed bin Talal. X, under Musk’s leadership, has seen its value plummet by 80 per cent since the acquisition, making xAI a potential redemption story for these backers.
Taking on OpenAI and building Grok
xAI’s flagship product, Grok, aims to rival OpenAI’s ChatGPT and Anthropic’s Claude. Embedded as a feature for X subscribers, Grok is designed to stand out with a less conventional, more sarcastic, and humorous tone compared to its competitors. Musk’s strategy appears to combine innovation with accessibility, appealing to a broader audience while emphasising Grok’s unique personality.
As xAI grows its capabilities and infrastructure, Musk’s rivalry with OpenAI continues to simmer. He has taken legal action against the company, accusing it of straying from its original mission to prioritise profit over humanity. With xAI’s rapid progress and substantial funding, Musk is positioning his company as a serious contender in the AI landscape.