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Bloomberg’s sources had earlier suggested that xAI was amid valuation discussions ranging from $15 billion to $20 billion.
In a recent social media post on X, Elon Musk dismissed claims that his artificial intelligence (AI) company xAI had secured $500 million in funding as part of a $1 billion investment goal.
The Tesla CEO responded directly to a Bloomberg article claiming the billionaire entrepreneur had secured funding for the newly formed AI company. Musk labeled the report as false, noting that the information in the article was inaccurate and misleading.
This is simply not accurate
— Elon Musk (@elonmusk) January 20, 2024
$1 Billion Funding Goal
Bloomberg’s sources had earlier suggested that xAI was amid valuation discussions ranging from $15 billion to $20 billion.
The report also hinted at ongoing negotiations between Musk and investors, exploring options to secure computing power in addition to or instead of equity shares in xAI.
The move could benefit venture capital firms’ portfolio companies requiring robust data processing capabilities for their AI products.
Sources suggested that the ongoing discussions are expected to be finalized in the coming weeks. The news of xAI’s funding goal was made public in December 2023 through a filing with the US Securities and Exchange Commission (SEC).
Ownership Stake in xAI
Musk had previously revealed in November last year that equity investors in X would receive a 25% ownership stake in xAI. This implied that investors were encouraged to invest at least 25% of their X investment into xAI. For example, if an investor committed $10 billion to X, they were invited to contribute $2.5 billion or more to xAI.
The AI company was launched in July 2023 as an alternative to OpenAI. At the time, Musk said he would head the startup as its CEO. The billionaire entrepreneur is already the CEO of both SpaceX and Tesla.
A few months after its official debut, the company released its proprietary product Grok, an artificial intelligence assistant tool that functions similarly to OpenAI’s ChatGPT.
Musk touted Grok as the best AI tool currently in the market. The chatbot operates using social media content sourced from X.
He also claimed that Grok was developed with features to compete with Meta’s LLaMA 2 AI model, excelling in solving math problems and reasoning at a level comparable to OpenAI’s GPT-3.5.
xAI Secures $865 Million in Private Sales
Despite Musk’s dismissal of the Bloomberg report, the AI startup had previously secured $865.3 million in a private sale of unregistered equity securities, according to a filing with the United States Securities and Exchange Commission (SEC) on December 5, 2023.
The filing specified that these securities would be sold to accredited investors, subject to resale restrictions under Rule 506(b). Notably, $134.7 million of securities had already been sold, with the initial sale occurring on November 29, 2023.
