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Musk’s AI Business May Raise $6 Billion

Musk's AI Business May Raise $6 Billion

It looks like Elon Musk is trying to take on OpenAI, and he has a lot of money to back it up. The Financial Times reported on Friday (Jan. 26) that his competitor xAI is in talks to raise $6 billion at a suggested value of $20 billion.

People who know about the situation told the magazine that Musk has been in talks with family offices in Hong Kong and is now focusing on sovereign wealth funds in the Middle East to get the money.

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A statement with the US Securities and Exchange Commission says that the new amount raised is a lot more than the $1 billion goal that xAI set last month. That’s how much xAI has raised so far: $135 million.

Musk tweeted last week that a report that his xAI startup had raised $500 million from backers to help reach its $1 billion goal was untrue.

xAI’s value is lower than OpenAI’s, but the same as Anthropic’s

The xAI company released the AI robot Grok in November of last year. It was trained on data from X and was meant to compete with OpenAI’s ChatGPT. The goal of Grok is to “answer questions with a bit of wit” and “a rebellious streak.” This company says not to use it “if you hate humor.”

The $20 billion value of xAI is still a small part of OpenAI’s, but it is about the same as that of Anthropic’s $18 billion.

A tech club scene

Even though funding for startups is going down generally, AI is still a bright spot. According to market research company Crunchbase, $50 billion was raised for AI startups around the world in 2023, which is 9% more than the previous year. Tech chiefs want to join too.

It turns out that Parag Agrawal, who was CEO of Twitter for a short time before Elon Musk took over, has raised about $30 million for his own AI company. It is said that the company is making tools for people who make large-language models (LLMs), which are what make chatbots work. According to Bloomberg on Thursday, January 25, OpenAI chairman Bret Taylor, who used to be co-CEO of Salesforce and chairman of the board of Twitter, is almost done with a new investment led by venture capital firm Sequoia Capital. This would value his AI company at $1 billion.

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