Elon Musk’s artificial intelligence startup xAI — which powers the snarky Grok chatbot — is aiming to raise billions of dollars in the coming weeks in a private funding round that could value the company as high as $20 billion, The Post has learned.
The fresh capital raise — which comes even as key rival Google grapples with the meltdown of its “woke” AI chatbot Gemini — is expected to take place in mid-to-late March and wrap up quickly, sources familiar with the matter told The Post.
Musk is looking to raise between $1 billion and $3 billion in cash from outside investors at a valuation that could range between $10 billion and $20 billion, two of the sources said. The mercurial tech billionaire may also personally invest several billion dollars in the startup himself, one of the sources said.
That could amount to a range previously reported by the Financial Times, which said in January that Musk was in talks to raise up to $6 billion and had approached the sovereign wealth funds as well as investors in Japan, South Korea, and Hong Kong.
Other participants are expected to include a small group of Musk’s handpicked investors, including Middle East-based sovereign wealth funds and US-based family offices that have pre-existing relationships with the eccentric billionaire.
A Musk spokesman declined to comment.
Despite signs of activity, Musk has repeatedly denied that xAI was raising money.
“xAI is not raising capital and I have had no conversations with anyone in this regard,” Musk said in response to the FT report earlier this year.
At the time of Musk’s denial, xAI had already disclosed plans for a fundraise in a regulatory filing that surfaced weeks earlier. In December, xAI said it would raise at least $1 billion through an equity offering.
Musk has positioned xAI as a direct competitor to Google and ChatGPT creator OpenAI. In November, Musk posted a barb from Grok that was aimed at the frontrunner: “ChatGPT 4? More like ChatGPT Snore!” (In response, OpenAI CEO Sam Altman branded Grok “cringey boomer humor.”)
The xAI round, while sizable for any other startup, would still place its valuation at a fraction of that of OpenAI, which recently closed an employee share sale that pushed its worth north of $80 billion.
OpenAI has raised $11.3 billion from investors to date, according to Crunchbase, and ChatGPT had more than 100 million active weekly users as of last November — establishing it as a clear frontrunner in the AI race. More recently, OpenAI unveiled Sora, a tool that creates videos based on users’ text-based prompts.
By comparison, Musk has yet to articulate a clear product lineup for xAI beyond Grok, which he has touted as a “TruthGPT” that will counter the left-leaning bias on display in other AI chatbots. xAI released Grok last year and it is available for use by paid subscribers on X.
Elsewhere, OpenAI CEO Sam Altman is reportedly seeking to raise trillions of dollars from investors as part of a wildly ambitious plan to jumpstart the production of precious computer chips needed to power AI.
Musk’s ownership of X could provide a partial explanation for the limited scope of the funding round. Through the social media giant, xAI already has access to a massive trove of data to train its AI models, as well as the company’s hardware infrastructure.
The timing for an xAI capital raise may be ripe given the recent disaster at Google, which was forced to disable its Gemini chatbot’s image creation tool after it began spitting out historically and factually inaccurate “diverse” pictures such as Black Vikings and female NHL players.
Gemini’s bizarre behavior was widely mocked on social media and held up by critics as a clear indication of political bias in the chatbot’s training – with Musk personally declaring that the “woke mind virus is killing Western Civilization.”
This story originally appeared on NYPost
