Musk’s xAI startup looking to raise up to $6bn to mount ChatGPT challenge

Musk’s xAI startup looking to raise up to $6bn to mount ChatGPT challenge

elon musk

Elon Musk’s artificial intelligence startup, xAI, is looking to drum up $6 billion of funding to develop the Grok chatbot and its “mission to advance our collective understanding of the universe”.

The company has hired Morgan Stanley (NYSE:MS), which is looking to tap investors in Asia, including Hong Kong, and the Middle East with talks about equity investments at a potential $20 billion valuation, the Financial Times reported today.

Led by Musk, xAI is a separate company from X Corp, the Nevada-based outfit says on its website, but acknowledges that it “will work closely” with the social media platform formerly known as Twitter, as well as Tesla (NASDAQ:TSLA) and other companies.

Grok, for example, is a large-language model generative AI, similar to ChatGPT, but is being trained using tweets on X with the aim of making it more up-to-date with events.

“Grok is an AI modeled after the Hitchhiker’s Guide to the Galaxy, so intended to answer almost anything and, far harder, even suggest what questions to ask,” the company says, with the chatbot designed to counter what Musk sees as ‘woke’ alternatives answer questions “with a bit of wit and has a rebellious streak” as its X training would suggest and “answer spicy questions that are rejected by most other AI systems”.

Led by Musk, xAI’s management and senior technical team come from DeepMind, Tesla and the research teams of Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), along with ChatGPT developer OpenAI, of Musk was a founder but since parted ways.

The fundraising is “still testing investor appetite” the FT story said, with documents filed with the US Securities and Exchange Commission last month confirmed xAI was seeking to raise $1 billion in equity funding.

It has raised $135 million so far, though a Bloomberg report this month said it had raised $500 million – though Musk said on X this was “simply not accurate”.

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