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Musk’s xAI raises $6 billion in funding

Musk’s xAI raises $6 billion in funding

xAI Funding

Elon Musk is once again the world’s richest person, thanks to his new artificial intelligence startup, xAI. Musk’s net worth now stands at $209.5 billion, surpassing French luxury goods tycoon Bernard Arnault’s estimated $204.3 billion. Musk launched xAI last July to compete with companies like ChatGPT creator OpenAI, which he co-founded in 2015 before leaving three years later.

Musk has criticized ChatGPT for being “woke” and claimed that its focus on profits has undermined its original mission of developing open-source artificial intelligence to “benefit humanity.

xAI recently released an open-source version of its Grok chatbot and has invited engineers to join the company to pursue a rigorous understanding of the universe, irrespective of popularity or political correctness. Musk reportedly owns a 60% stake in xAI, valued at $14.4 billion following a recent deal led by investors such as Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, and Prince Alwaleed Bin Talal of Saudi Arabia’s Kingdom Holding Company. The rest of Musk’s fortune is largely tied up in his nearly 12% Tesla stake (excluding options) and an estimated 42% SpaceX stake, each worth around $75 billion.

Additionally, Musk’s 74% stake in his social media company, now worth approximately $7 billion, has significantly depreciated since he acquired it in 2022. Tesla’s fluctuating stock prices and skyrocketing SpaceX shares have seen Musk move in and out of the top spot on the rich list in recent years. Arnault overtook Musk in late January after a Delaware judge voided nearly $50 billion of performance-based Tesla stock options granted to Musk in 2018, ruling that the process was unfair.

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Tesla shareholders are set to vote on the reapproval of these options, discounted by 50% following the ruling, on June 13. Meanwhile, SpaceX is reportedly preparing for a tender offer that would value the company at around $200 billion, up from $180 billion last December.

Musk’s AI funding attracts investors

May was a significant month for funding rounds in the U.S., with four companies raising $1 billion or more and a minimum of $200 million required to make the top 10 list. AI fueled many of these massive fundings, marked by three rounds exceeding a billion dollars. xAI officially announced its long-awaited fundraise, bringing in a staggering $6 billion.

This makes it the second-most-valuable generative AI company globally, valued at $24 billion post-money. AI cloud infrastructure startup CoreWeave secured a $1.1 billion round, valuing the company at $19 billion. Scale AI raised $1 billion, bringing its valuation to $13.8 billion, nearly double its previous valuation of $7.3 billion from April 2021.

Other notable funding rounds in May included cloud security startup Wiz raising $1 billion at a $12 billion valuation, self-driving startup Motional receiving a $475 million investment, and cloud analytics startup Sigma raising $200 million in a Series D round. The competitive landscape for artificial intelligence is increasingly crowded. CoreWeave and other startups are pouring significant resources into the field, pushing the boundaries of what AI can achieve.

Musk’s xAI has some notable advantages, including strong financial backing and Musk’s own illustrious track record in tech innovation. However, the company must differentiate itself in a landscape already populated by formidable opponents. Musk’s ambitions and ability to attract such robust investment signal that xAI will be a player to watch, capable of potentially sparking significant advancements and rivaling the established titans of AI.

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