Elon Musk’s artificial intelligence start-up xAI is in talks to raise up to US$6-billion at a proposed valuation of $20-billion, the Financial Times reported (paywall) on Friday, as the billionaire entrepreneur looks to mount a challenge to OpenAI. The start-up has been in talks with family offices in Hong Kong and is targeting sovereign wealth funds in the Middle East for the funding, according to the report, which cited multiple people familiar with the matter.

The AI race has been heating up with several investors signing big cheques for start-ups looking to capitalise on what has captured Silicon Valley’s attention over the past year. At $20-billion, xAI’s valuation would be a fraction of OpenAI’s, but in line with some other peers. A $6-billion fundraise would be much higher than the $1-billion goal xAI had set last month in a filing with the US Securities and Exchange Commission.

At $20-billion, xAI’s valuation would be a fraction of OpenAI’s, but in line with some other peers such as Google-backed Anthropic.

Musk has approached investors in Japan and South Korea for the latest fundraise, the Financial Times reported. His office did not immediately respond to a request for comment.

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Morgan Stanley is coordinating the fundraise, according to the report. The bank was one of several that helped finance Musk’s takeover of social media platform X, formerly known as Twitter. Last week, Musk denied a report that xAI had secured $500-million in commitments from investors toward a $1-billion funding goal.

Vocal

The CEO of Tesla has been vocal about his plans to build safer AI. Musk co-founded OpenAI in 2015, but stepped down from its board in 2018. Last year, xAI launched “Grok”, a chatbot rivaling OpenAI’s ChatGPT.

Musk also warned about developing AI and robotics outside Tesla, earlier this month, unless he gets more voting control at the electric vehicle maker. He said he would be uncomfortable building Tesla into an AI leader unless he had 25% voting control.

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Thanks to the popularity of ChatGPT, the AI industry has been a rare bright spot in a subdued start-up funding environment. Anthropic and Microsoft-backed Inflection AI have also raised funds in recent months.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Elon Musk’s artificial intelligence start-up, xAI, will be integrated into his social media platform X and also be available as a standalone app, he said on Sunday in a post. The billionaire also said xAI released its first AI model, a bot named Grok, after making it available to all X Premium+ subscribers on Friday. The start-up aims to create AI tools that “assist humanity in its quest for understanding and knowledge” and Grok has been designed to answer questions with a bit of wit.

Grok has real-time access to info via the X platform, which is a massive advantage over other models

Musk who has criticised Big Tech’s AI efforts as ridden with censorship, in July launched xAI, calling it a “maximum truth-seeking AI” that tries to understand the nature of the universe to rival Google’s Bard and Microsoft’s Bing AI.

“Grok has real-time access to info via the X platform, which is a massive advantage over other models,” Musk added.

X, the social media firm formerly known as Twitter which Musk owns, is separate from xAI, but the companies work closely together. xAI also works with his electric car maker Tesla and other companies.

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Last week, Musk told British Prime Minister Rishi Sunak he thought AI was “the most disruptive force in history”. The technology will be able to “do everything” and make employment as we know it today a thing of the past, Musk speculated at the first global AI Safety Summit, in Bletchley Park, England.

In 2015, Musk co-founded OpenAI, the company behind ChatGPT, which has created a frenzy for generative AI technology around the world, but stepped down from the board in 2018.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry