Elon Musk's xAI raises $6B from Valor, a16z, and Sequoia

Elon Musk’s AI startup, xAI, has raised $6 billion in a new funding round, it said today, in one of the largest deals in the red-hot nascent space, as he shores up capital to aggressively compete with rivals including OpenAI, Microsoft, and Google.

Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity, Prince Alwaleed Bin Talal and Kingdom Holding are among the backers who have invested in xAI’s Series B funding, the startup wrote in a blog post.

The funding confirms TechCrunch‘s reporting from April that xAI was looking to raise $6 billion. xAI at the time was finalizing the round that would have given it a valuation of $18 billion, TechCrunch reported at the time. xAI, which started just last year and has spun out of social network X, and whether X had also invested.

Musk confirmed that the investment round was valued at $18 billion pre-money.

Musk is one of the earliest and most high-profile entrepreneurs in the AI space. Tesla, a car company he leads, is the top EV carmaker with self-driving technologies. He is also a co-founder of OpenAI, a startup in which he has invested tens of millions of dollars. Musk’s love for OpenAI has waned since: In March, he sued OpenAI and its co-founder Sam Altman for allegedly betraying its mission statement and becoming a “closed-source de facto subsidiary” of Microsoft. He has also accused Google of coding bias into its AI products.

After forming xAI year, Musk released its chatbot ChatGPT-rival Grok 1.0 model in November. Later, the company made the model available through a chatbot to Premium+ users — who pay $16 a month — on X. In April, the company released the new Grok 1.5 model and also allowed Premium users on X to access the chatbot. Additionally, the Musk-owned company previewed Grok’s multimodal capabilities in April. Earlier this year, the company open-sourced the Grok model but without any training code.

xAI plans to deploy the funds from the new financing round to take its first set of products to market, build advanced infrastructure, and accelerate the research and development of future technologies, it said in the blog post. The company is likely to look for partnerships to introduce Grok to users beyond X.

The company claims that it aims to develop “truthful” AI systems. Though, Grok’s news summary feature on X is reported to hallucianate and generate misleading information.