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Friday, March 1, 2024

xAI Investment Figures Denied by Elon Musk

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Grok, an AI chatbot with access to tweets from all over X and programmed to be as snarky as possible, is the principal product offered by xAI.

The company is Elon Musk’s response to OpenAI – which he also co-founded. However, he later left after disagreements with Sam Altman and others over how to develop and profit from the tech that they were building.

Bid for Investment Registered Late Last Year

In early December, Elon Musk filed an SEC Form D for xAI, a document that allows for the sale of securities without full registration, on the condition that the sale remains private.

The document states that up to $1 billion worth of equity in the firm would be sold, with over $134 million already spoken for.

In spite of the controversial nature of the new AI platform – and the somewhat subsiding buzz surrounding AI development – the founders’ reputation made it quite likely that interest in the sale would be high, even if it were closed off to retail investors.

Bloomberg Quotes Figures, Musk Refutes Them

According to Bloomberg, xAI is already halfway to meeting its funding target. Confidential sources for the media giant have privately stated that $500 million had already been committed to the platform, with final arrangements to be made within the next few weeks. According to Musk, investors in X would also receive a 25% stake in xAI. Sources say the targeted valuation of the company is between $15 and $20 billion.

In more specific terms, this would mean that X investors are also invited to invest in the AI startup.

“In practice, that means those investors are invited to invest in xAI at least 25% of the amount they invested in X, according to a person with knowledge of the arrangement. If they invested $10 billion in X, they’re invited to invest $2.5 billion or more in xAI.”

Investors who aided in Musk’s takeover of Twitter include Sequoia Capital, Andreessen Horowitz, Fidelity Management, and others. According to the unnamed source(s), some of the private investors in talks with Musk have requested to buy computing power from xAI in lieu of shares or, in some cases, alongside them.

However, the hotshot CEO has disputed Bloomberg’s version of events.

Unfortunately, this statement does not clarify much. Musk could be disputing the funding numbers, the investment strategy of potential investors, the timeline, the valuation sought after, or all of them at once.

It remains to be seen how much of the story will be proven true once the asset sale is finished. Bloomberg has since updated their story to reflect Musk’s comments.

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