Elon Musk's AI business, xAI, has increased $6 billion in a Series C funding round. This week, the company stated that Andreessen Horowitz, Fidelity, Blackrock, Valour Equity Partners, Lightspeed, Morgan Stanley, OIA, MGX, QIA, Sequoia Capital, Vy Capital, Nvidia, AMD, and other investors had participated.
According to a public filing, Kingdom Holdings, a Saudi multinational holding company, invested approximately $400 million in the round. The filing also announced that xAI is now valued at $45 billion, nearly double its previous estimation. The fresh funding boosts xAI's total raised to $12 billion, including the $6 billion tranche increase in May.
Developing up AI
Musk launched xAI last year. Soon after, the business started Grok, its flagship creative AI model. It currently powers many X features, including a chatbot accessible to X Premium subscribers and free users in select countries.
Musk has dismissed ChatGPT and other AI systems for being too "woke" and "politically correct" after Grok's own willingness to cross certain limits and avoid political topics. He also defined Grok as "maximally truth-seeking" and less biased than rival models after evidence suggesting that Grok leans left.
In the creative AI competition, xAI is fighting with serious opponents such as OpenAI and Anthropic. In October, the company revealed an API that lets users integrate Grok into third-party apps, platforms, and services. In addition, it just introduced a standalone Grok iOS app to a test audience. Musk states that it is not a fair fight.
In particular, Musk frequently states that X's data provides xAI a competitive advantage. Last month, X modified its privacy policy to enable third parties, such as xAI, to train models using X posts.
Predictably, OpenAI disagrees with Musk's version of events. In a mid-December press release, the corporation defined Musk's complaint as deceptive, unsupported, and bitter grapes.
An xAI Environment
xAI has created a vision in which its models will be trained on data from Musk's multiple companies, such as Tesla and SpaceX, and then used to promote technology across the board.
xAI's developer and consumer-facing materials generate approximately $100 million in revenue each year. For instance, Anthropic is supposedly on track to earn $1 billion this year, while OpenAI intends for $4 billion by the end of 2024.
xAI's operations have risen dramatically in the year after its inception, from a dozen staff members in March 2023 to more than 100 now. In October, the business moved to OpenAI's former corporate premises in San Francisco's Mission district. xAI has apparently informed investors that it intends to increase further funds next year.
It will not be the only AI lab increasing massive funds. Anthropic just got $4 billion from Amazon, increasing its total funding to $13.7 billion, while OpenAI increased $6.6 billion in October, raising its war chest to $17.9 billion.
Megadeals like OpenAI and Anthropic enhanced AI venture capital activity to $31.1 billion across over 2,000 agreements in Q3 2024, according to PitchBook statistics.