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    Home / News / Business News / Elon Musk's AI firm xAI secures $6B in fresh funding
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    Elon Musk's AI firm xAI secures $6B in fresh funding
    The funding round was joined by 97 investors

    Elon Musk's AI firm xAI secures $6B in fresh funding

    By Dwaipayan Roy
    Dec 24, 2024
    11:54 am

    What's the story

    Elon Musk's artificial intelligence (AI) company, xAI, has successfully raised $6 billion in new funding, according to a filing with the US Securities and Exchange Commission.

    The investment round was joined by 97 investors, each of whom contributed at least $77,593.

    The list featured big names like Andreessen Horowitz, Blackrock, Fidelity, MGX, Morgan Stanley, Sequoia Capital, Valor Equity Partners, NVIDIA and AMD.

    With this latest funding round, xAI's total capital raised now stands at an impressive $12 billion.

    Valuation growth

    xAI's valuation and future funding

    In November, CNBC reported xAI was eyeing a $50 billion valuation, a huge jump from its value six months ago.

    The Financial Times reported that only investors who had backed xAI in its previous fundraising round were permitted to participate in this one.

    Those who funded Musk's Twitter (now X) acquisition were also given access to up to 25% of xAI's shares.

    Product launch

    Grok: xAI's flagship AI model

    xAI, founded by Musk last year, quickly launched its flagship generative AI model, Grok.

    The groundbreaking model now powers a number of features on X, including a chatbot available to X Premium subscribers and free users in select regions.

    Musk had previously described Grok as having "a rebellious streak," capable of answering "spicy questions that are rejected by most other AI systems."

    AI integration

    Grok's integration and future prospects

    Grok has become more and more integrated into X, first only accessible to X users and developers who could run the "open source" version.

    Now, with the help of an alliance with open image generator Flux, Grok can generate images on X and analyze them too.

    Grok may handle more X functions in the future, improving search capabilities, account bios, post analytics and replies.

    Legal dispute

    Legal battle and data advantage

    xAI is locked in a legal battle with OpenAI and Microsoft, accusing them of "actively trying to eliminate competitors" such as xAI by "extracting promises from investors not to fund them."

    Musk also claims that X's data gives xAI an edge over competitors.

    Coincidentally, last month, X updated its privacy policy to permit third parties, including xAI, to train models on X posts.

    Business model

    Vision and revenue generation

    xAI imagines training its models on data from Musk's different companies, such as Tesla and SpaceX.

    The AI firm is already powering customer support features for SpaceX's Starlink internet service, The Wall Street Journal reported.

    Although some Tesla shareholders have objected to these plans, xAI's deals have pushed its annual revenue to about $100 million.

    Growth trajectory

    Rapid expansion and future plans

    Since its launch, xAI has witnessed rapid growth in operations, growing from a mere dozen employees in March 2023 to over 100 today.

    In October, the start-up occupied OpenAI's former corporate offices in San Francisco's Mission neighborhood.

    Reportedly, xAI has also notified investors of its plans to raise more funds next year.

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