Elon Musk’s AI start-up plans to raise up to $6 billion to take on OpenAI

(Reuters) – Elon Musk’s artificial intelligence start-up xAI is in talks to raise up to $6 billion at a proposed valuation of $20 billion, the Financial Times reported on Friday, as the billionaire entrepreneur looks to challenge OpenAI.

The start-up is in talks with family offices in Hong Kong and targeting sovereign wealth funds in the Middle East for funding, according to the report, which cited multiple people familiar with the matter.

The AI ​​race is heating up as many investors have signed big checks for start-ups to take advantage of what has captured Silicon Valley’s attention over the past year.

The $6 billion fundraise would far exceed the $1 billion target that xAI set in a filing with the U.S. Securities and Exchange Commission last month.

At $20 billion, xAI’s valuation would be a fraction of OpenAI’s, but in line with some other peers like Google-backed Anthropic.

Musk has approached investors in Japan and South Korea for the latest fundraising, the Financial Times reports. His office did not immediately respond to a Reuters request for comment.

According to the report, Morgan Stanley is coordinating the fundraising. The bank was one of several that helped finance Musk’s acquisition of social media platform X, formerly known as Twitter.

Last week, Musk denied a report that xAI had secured $500 million commitments from investors towards its $1 billion funding target.

The Tesla CEO has been vocal about his plans to create safer AI. Musk co-founded OpenAI in 2015, but stepped down from its board in 2018.

Last year, xAI launched “Grok,” a chatbot that competes with OpenAI’s ChatGPT.

Musk also warned earlier this month about developing AI and robotics outside of Tesla unless he gets more voting control at the electric-vehicle maker. He said he would be uncomfortable making Tesla an AI leader unless he had 25% voting control.

Due to the popularity of ChatGPIT, the AI ​​industry has been a rare bright spot in the dim start-up funding environment.

Anthropic and Microsoft-backed Inflection AI have also raised funding in recent months.

(This story has not been edited by News18 staff and is published from a syndicated news agency feed – Reuters)