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