Musk’s AI startup nets $6b to take on rivals like OpenAI

Elon Musk, founder of xAI / Photo credit: Shutterstock

Elon Musk-founded AI startup xAI has secured US$6 billion in a series B round from Valor Equity Partners, Vy Capital, and Andreessen Horowitz, among others.

This follows a report last week saying that xAI was in talks to close a US$6.5 billion round at a valuation of US$24 billion.

Founded in July 2023,  xAI developed Grok, a ChatGPT rival powered partly by data from X (previously Twitter).

The AI startup has now made the Grok-1 model open-source to spur further improvements. This also differentiates xAI’s models – which Musk touted as “truth-seeking” technology – from those of Google parent firm Alphabet and Microsoft-backed OpenAI.

Musk had also taken legal action against OpenAI and its co-founders Sam Altman and Greg Brockman for allegedly deviating from the firm’s open-source ethos to chase profit. Musk was also a co-founder at OpenAI.

The series B funds will support xAI in launching its first slew of products and boosting its infrastructure. The company said it has updates and product announcements coming soon.

With its latest fundraise, xAI joins the expanding roster of startups that have recently secured billions of dollars in funding.

In February, Alibaba led a US$1 billion funding round in Chinese startup Moonshot AI. Meanwhile, Alpha Intelligence Capital, which invests in AI companies including OpenAI, is raising a US$250 million fund from Temasek Holding and others.

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