Elon Musk's artificial intelligence start-up xAI is in talks to raise up to $6 billion at a proposed valuation of $20 billion, the Financial Times reported on Friday, as the billionaire entrepreneur looks to mount a challenge to OpenAI.
The start-up has been in talks with family offices in Hong
Kong and is targeting sovereign wealth funds in the Middle East for the
funding, according to the report, which cited multiple people familiar with the
matter.
The AI race has been heating up with several investors
signing big checks for start-ups looking to capitalize on what has captured
Silicon Valley's attention over the past year.
A $6-billion fundraise would be much higher than the $1
billion goal xAI had set last month in a filing with the U.S. Securities and
Exchange Commission.
At $20 billion, xAI's valuation would be a fraction of
OpenAI's, but in line with some other peers such as Google-backed Anthropic.
Musk has approached investors in Japan and South Korea for
the latest fundraise, the Financial Times reported. His office did not
immediately respond to a Reuters request for comment.
Morgan Stanley is coordinating the fundraise, according to
the report. The bank was one of several that helped finance Musk's takeover of
social media platform X, formerly known as Twitter.
Last week, Musk denied a report that xAI had secured $500
million in commitments from investors toward a $1 billion funding goal.
The CEO of Tesla has been vocal about his plans to build
safer AI. Musk co-founded OpenAI in 2015, but stepped down from its board in
2018.
Last year, xAI launched "Grok", a chatbot rivaling
OpenAI's ChatGPT.
Musk also warned about developing AI and robotics outside
Tesla, earlier this month, unless he gets more voting control at the
electric-vehicle maker. He said he would be uncomfortable building Tesla into
an AI leader unless he had 25% voting control.
Thanks to the popularity of ChatGPT, the AI industry has
been a rare bright spot in a subdued start-up funding environment.
Anthropic and Microsoft-backed Inflection AI have also
raised funds in recent months.
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