- SpaceX and Tesla CEO Elon Musk has denied rumors of any involvement with xAI’s attempt to raise funds.
- Despite reports suggesting that xAI has engaged in discussions with potential investors, Musk insists that xAI is not actively seeking external capital.
In a recent statement on X, Elon Musk, CEO of SpaceX and Tesla, dismissed rumours surrounding his artificial intelligence startup xAI’s alleged efforts to secure funding. Musk firmly stated, “xAI is not raising capital, and I have had no conversations with anyone in this regard.” This response comes following earlier media reports that suggested xAI was seeking to raise up to $6 billion.
Rumored funding talks: Insights from the Financial Times
Contrary to the speculations, a report from the Financial Times claimed that xAI has indeed been engaged in discussions with potential investors. However, it turns out these talks are not centred around raising capital. Instead, xAI has been exploring partnerships with family offices in Hong Kong and has been targeting sovereign wealth funds in the Middle East. These efforts aim to bolster xAI’s position in the competitive AI industry, which has recently garnered significant attention and investment from Silicon Valley.
Musk’s silence and previous denials
Despite the ongoing discussions, Musk’s office did not respond to Reuters’ request for comment, leaving the status of xAI’s funding plans uncertain. It should be noted that just last week, Musk refuted another report claiming that xAI had already secured $500 million in commitments from investors toward a $1 billion funding goal. These repeated denials highlight Musk’s insistence that xAI is not actively seeking external capital.
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xAI’s pursuit and competition in the AI race
Further information from the Financial Times sheds light on xAI’s aspirations within the AI industry. The startup is reportedly exploring the possibility of raising $6 billion from global investors, including family offices in Hong Kong. The ultimate goal is to directly compete with established players like Microsoft and OpenAI. Negotiations are currently ongoing, and the terms of the funding may undergo adjustments before reaching a final agreement. Musk aims for xAI to achieve a valuation of $20 billion, prompting him to approach not only sovereign wealth funds in the Middle East but also potential investors in Japan and South Korea. The fundraising efforts are said to be coordinated by Morgan Stanley, though the bank has chosen to remain tight-lipped on the matter.
xAI’s funding landscape: Comparisons and potential equity offerings
Considering the competitive landscape, it is worth noting that OpenAI has received substantial funding, primarily from Microsoft, amounting to approximately $13 billion. Rumors suggest that OpenAI is preparing for another large funding round. Another major AI startup, Anthropic, has managed to secure around $6 billion in investments from tech giants Google and Amazon.
Contrary to these figures, Elon Musk’s xAI has already garnered investor commitments totaling $500 million toward its $1 billion funding goal. Bloomberg reports that discussions surrounding xAI’s valuation range between $15 billion and $20 billion. Interestingly, investors who have previously invested in Musk’s other ventures, including Larry Ellison, Sequoia Capital, Andreessen Horowitz, Fidelity Management & Research Co., and Saudi Prince Alwaleed bin Talal, are expected to possess a 25% stake in xAI.
Bloomberg’s sources reveal that xAI intends to offer equity investors in X an opportunity to invest at least 25% of their initial investment in xAI. Another intriguing aspect under consideration is the potential acquisition of computing power by interested parties, either alongside or instead of xAI shares. The final terms and conditions of this funding endeavor are expected to be finalized in the coming weeks.
Musk’s response: ‘Fake news’
In response to Bloomberg’s report, Musk expressed his dissatisfaction on X, dismissing it as “fake news.” However, he did not explicitly specify which aspects of the report were inaccurate or misleading.
In conclusion, Elon Musk’s xAI has categorically denied any intentions of raising capital, countering recent reports of ongoing funding discussions. While the status of xAI’s funding plans remains uncertain due to the lack of official comments, it is evident that the AI industry continues to attract significant investments and attention. The competition within the field intensifies as more startups seek to capitalize on the burgeoning potential of AI technologies.
