Elon Musk’s artificial intelligence (AI) startup, xAI, has successfully secured $6 billion in funding through a Series B round. The funding round, which took place on May 26, saw participation from prominent investors including Vy Capital, Andreessen Horowitz, Sequoia Capital, and Saudi billionaire Prince Alwaleed Bin Talal. This significant capital raise will enable xAI to bring its first products to market, enhance its infrastructure, and accelerate research and development efforts for future technologies. Musk also hinted at upcoming announcements in the coming weeks.
This funding round has propelled xAI’s valuation to $24 billion, a substantial increase from its previous valuation of $18 billion just 11 months after its launch in July 2023. In comparison, OpenAI, the creator of ChatGPT, is currently valued at $80 billion. This valuation difference can be attributed to OpenAI’s eight-year head start, as it was founded in December 2015.
While Musk was initially involved with OpenAI as a co-founder of ChatGPT, he had a falling out with the management team and subsequently left the company. In March 2024, Musk filed a lawsuit against OpenAI and its co-founder Sam Altman, accusing them of deviating from the nonprofit’s mission and becoming a “closed-source de facto subsidiary” of Microsoft. Musk had been a significant contributor to OpenAI, donating over $44 million between 2016 and September 2020. Although he left the board in 2018, he declined an offer of a stake in the for-profit arm of OpenAI on principle.
In July 2023, Musk founded xAI and launched its ChatGPT competitor, Grok 1.0, in November 2023. Grok is a generative AI model that was developed over several months using a cluster of “tens of thousands” of GPUs. The training process involved gathering data from the web up until the third quarter of 2023, supplemented by feedback from human assistants referred to as “AI tutors” by xAI. The Grok 1.5 model, an upgraded version of Grok-1, was announced in March 2024. The chatbot powered by Grok is available to X Premium and Premium+ users, with Premium users gaining access in March 2024.
Speaking at Viva Tech Paris 2024, Musk acknowledged that xAI, as a new company, still has a long way to go before it can compete with industry leaders such as Google DeepMind and OpenAI. However, he expressed optimism about Grok’s rapid development and its potential for future competitiveness in the AI landscape.