Global Intel Hub — Knoxville, TN — (Zero Hedge Exclusive) 10/31/2024 xAI, the AI alternative founded by Elon Musk (who also founded OpenAI and then distanced himself from the firm when he learned they were working on some dark things), has been quietly building alternative AI models. The company raised $6Bn at $24Bn in a May 2024 Series B offering which was oversubscribed within hours. Rumors are now circulating that the company is planning on a back to back raise, at $40 Bn or $45 Bn with a follow on at $75 Bn, including high profile AI investors such as NVIDIA. These are just unconfirmed rumors, however, WSJ has published a story saying the same:
Elon Musk’s xAI is in talks with investors for a funding round that would value it around $40 billion, according to people familiar with the matter, escalating the tech industry’s race to build advanced generative AI technology. The startup was last valued at $24 billion just a few months ago, when it raised $6 billion in the spring.
Of course the question is who are “people familiar with the matter” similar to the political “confidential sources say” – with no verification of who those sources are, and without confirmation by the company, there’s no way of knowing if that’s true or not. However, WSJ has a solid reputation, and Bloomberg quickly followed on with their own version:
The funding discussions are early, said the person, who asked not to be identified discussing private information, and the details could still change or the talks could fall apart.
Musk’s xAI did not immediately respond to requests for comment. The Wall Street Journal earlier reported on the deal, citing people familiar with the talks.
The company’s valuation was $24 billion including dollars raised during its last funding round in May, meaning the latest deal would represent a substantial increase, vaulting it into the ranks of most valuable startups in the US. The money raised in the company’s new round would be added to its $40 billion valuation, the Journal reported.
Early on Thursday, Musk explained during a virtual appearance at the the Future Investment Initiative conference in Riyadh that his aim was to double xAI’s access to compute — the coveted resource that fuels AI. Musk has said that xAI’s facility in Memphis is already the largest such data center.
“We already have with xAI the most powerful training cluster in the world and we are about to double it,” Musk said.
In any event, considering the last raise was fundamentally oversubscribed, it’s not difficult to believe this story. AI is overheating and there are limited places to invest, once you’ve exhausted the obvious names. Big funds don’t want to invest in the 100,000 + AI startups that have been registered in the past year alone, they want to stick with Unicorns that have at least the appearance of a proven track record.
Whether this story is true or not, we have no doubt that xAI will not have any problem raising the needed capital.
Co-Produced in collaboration with Venture Capital Cross @ Blog.VCCross.com
References
[2] https://www.bloomberg.com/news/articles/2024-10-29/musk-s-xai-in-talks-for-40-billion-valuation-wsj-says full read @ https://archive.is/5aTRL
[3] https://seekingalpha.com/news/4219861-xai-discussing-raising-funds-at-40b-valuation-report
