Elon Musk’s xAI startup is in talks to raise up to $6 billion as the billionaire looks to global investors, particularly Hong Kong, to fund his OpenAI rival project.
Representatives of the xAI company held negotiations with several potential investors in Hong Kong in the hope of raising up to $6 billion while valuing the startup itself at $20 billion – negotiations have not yet been completed, and Musk is still assessing investor sentiment. Sovereign wealth funds in the Middle East, investors in Japan and South Korea can also become partners of xAI. A US artificial intelligence company raising funds in Hong Kong could backfire due to geopolitical tensions between the US and China.
Fundraising for Elon Musk’s startup is being coordinated by Morgan Stanley, which in 2022 helped the billionaire purchase Twitter, now renamed X. The scale of fundraising reflects the enormous costs required to develop generative AI systems – models capable of generating text and images in a matter of seconds and software code, but they require huge computing resources, huge amounts of training data and the latest chips to work.
In December, Musk’s xAI launched its first product, a chatbot called Grok, which is trained using social media posts on X, allowing it to provide more relevant answers than competitors.
Morgan Stanley is coordinating the fundraising, one of the people said.