BUSINESS

Elon Musk’s AI-Powered Startup Seeking to Give Rival OpenAI Up to $6 Billion

(Reuters) -In an attempt to take on OpenAI, billionaire entrepreneur Elon Musk’s artificial intelligence start-up xAI is reportedly in discussions to raise up to $6 billion at a $20 billion valuation, according to a Financial Times story published on Friday.

The start-up is aiming to raise money from sovereign wealth funds in the Middle East and has had discussions with family offices in Hong Kong, as per the article that quoted several individuals with knowledge of the situation.

With several investors writing large cheques to start-ups hoping to cash in on what has drawn Silicon Valley’s attention in the last year, the race to develop AI has been intensifying.

The $1 billion target that xAI had said in a filing with the U.S. Securities and Exchange Commission last month would be significantly surpassed by a $6 billion fundraising effort.

xAI’s value, at $20 billion, is comparable to that of some of its rivals, such Google-backed Anthropic, although it is still far less than that of OpenAI.

According to the Financial Times, Musk has contacted investors in South Korea and Japan about the most recent fundraising effort. A Reuters request for comment was not immediately answered by his office.

The article states that Morgan Stanley is in charge of organizing the fundraising. The bank was one of many that provided funding for Musk’s acquisition of X, the erstwhile Twitter social media network.

Musk refuted a story published last week that xAI has pledged $500 million in investment from investors, moving it closer to its $1 billion target.

The Tesla CEO has made no secret of his intentions to create AI that is safer. In 2015, Musk co-founded OpenAI; however, in 2018, he left the company’s board.

A chatbot named “Grok” from xAI debuted last year, competing with OpenAI’s ChatGPT.

Earlier this month, Musk issued a warning about the development of AI and robots outside of Tesla unless he gains more voting power at the electric car manufacturer. He said that until he had a 25% voting stake, he would feel uneasy transforming Tesla into an AI leader.

The AI sector has been a rare bright light in a sombre start-up financing climate because of ChatGPT’s growing popularity.

Inflection AI, funded by Microsoft and Anthropic, has also received money recently.

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