Elon Musk’s start-up xAI seeks to raise $1bn

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Elon Musk’s artificial intelligence start-up xAI is looking to raise $1bn in equity, according to a filing with the US securities regulator, as the billionaire races to challenge rivals such as OpenAI in the fast-growing field of generative AI.

The company had already raised $135mn from investors, the filing with the Securities and Exchange Commission said. It is asking investors to put in a minimum of $2mn.

Generative AI companies — whose technology can automatically generate humanlike text and imagery — have raised billions of dollars this year after Microsoft-backed OpenAI released its consumer chatbot, ChatGPT, to fanfare in November 2022. Critics, however, warn too much hype could create a possible bubble.

Musk was one of OpenAI’s co-founders in 2015 but he left three years later. OpenAI raised $10bn from Microsoft earlier this year, while Google recently committed to investing $2bn in Anthropic, a start-up co-founded by former OpenAI executives. Other Silicon Valley giants such as Mark Zuckerberg’s Meta have been investing billions into their own in-house AI products. 

Musk launched xAI in July to “understand the true nature of the universe”. Last month, the company released its first AI model, a “sarcastic” chatbot called Grok, which has been trained on X, the social media platform Musk bought for $44bn a year ago. Grok will be made available to certain premium subscribers of X, who pay about $16 a month.

Last month, Musk said that investors in X would own 25 per cent of xAI. 

He recently said that “AI will be able to do everything” and render human work obsolete. However, he has also been critical of the space, signing up to a letter calling for a pause on the development of advanced AI systems. 

The fundraising efforts follow recent chaos at OpenAI, with the recent unexpected ouster and then rapid return of its chief executive Sam Altman. The reasons for the tumult remain shrouded in secrecy.

Axios first reported news of the xAI fundraising.