Report: Elon Musk’s generative AI startup xAI to close on $6B funding round next month

XAI Corp., the generative artificial intelligence startup created by Elon Musk to compete with OpenAI and other AI model makers, is hoping to close on a bumper funding round next month that would bring its value to north of $24 billion, according to a report today in the Financial Times.

The paper cited one person familiar with the deal as saying that xAI aims to wrap up its $6 billion funding round in June, having set the wheels in motion last year. The round was set to close this month, but that still hasn’t happened. However, xAI is now reportedly “getting close” to its target, according to the person, who asked not to be identified because the details aren’t public.

Neither Musk (pictured) nor the company was prepared to comment on the report, the Financial Times said.

Musk’s AI startup is a rival to OpenAI and has been marketed to Silicon Valley investors through a pitch deck that showcases the entrepreneur’s track record at Tesla Inc. and SpaceX Corp., the report suggests. The deck reportedly notes that xAI and its flagship chatbot, called Grok, can tap into high-quality data from X, the social media platform formerly known as Twitter.

That is a key advantage, because access to data is essential for training high-quality large language models. The ability to tap into X’s data would mean xAI is less likely to need to forge partnerships with content providers like Reddit and News Corp., as OpenAI is doing.

XAI has emerged as a prominent player in the generative AI space since open-sourcing its Grok chatbot, as many see this as a key step towards democratizing generative AI technology.

The Grok model is available to X Premium+ subscribers through platforms such as BitTorrent and GitHub. When Grok was first launched in November, xAI said the chatbot is “designed to answer questions with a bit of wit and has a rebellious streak,” in an attempt to differentiate it from other generative AI chatbots.

When the new funding round concludes, xAI will have a pre-money valuation of $18 billion, the Financial Times said. That’s a metric that doesn’t include the dollar amount raised.

Musk launched xAI about a year ago, saying that its goal is to “understand the true nature of the universe. He added that he intended to build a company that will rival industry leaders like OpenAI and Google LLC’s DeepMind. The billionaire was a co-founder and early backer of OpenAI, but left the company several years ago, amid disagreements over its direction and its move away from open source. Since then, Musk has often feuded publicly with OpenAI Chief Executive Sam Altman.

On Thursday, Musk said in a remote interview at the Viva Technology conference in Paris that xAI’s goal is to be “as truth-seeking as possible.” He criticized other prominent models, such as ChatGPT and Google’s Gemini, of “pandering” to political correctness. He also said he wants Grok “to be the funniest AI chatbot.”

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