People familiar with the matter reported that Elon Musk’s artificial-intelligence company, xAI, intended to raise $15 billion in new equity at a $230 billion valuation.
The new valuation would be a substantial amount higher than $113 billion xAI disclosed following its acquisition of the social-media site X (formerly known as Twitter) of Musk in March.
The people stated that the terms of the new fundraising were revealed by Musk’s wealth manager, Jared Birchall, to investors on Tuesday night.
It was not found out whether the new valuation that was expected to be shared by Birchall with the investors was between premoney and postmoney. Birchall and a spokeswoman of xAI didn’t respond immediately to requests for comment.
However, xAI had earlier been reported by CNBC as planning a fundraise. Following the publication of the article, Musk wrote “false” in response to an X post about the article from a fellow user of his social-media platform.
Most AI startups, such as xAI, are outspending cash fast in their quest to create infrastructures to assist in training and refining models.
The companies are positioning the scene of trillions of dollars in expenditure over the next few years, leaving them in a near-constant state of fundraising.
xAI raised a total of $5 billion in equity and $5 billion in debt to support the construction of its Colossus data center in Memphis, Tenn., in June. The Wall Street Journal previously reported that Musk’s rocket company, SpaceX, had invested $2 billion in the company through the same round.
As CEO of Tesla, Musk has publicly backed the possibility of Tesla investing in xAI. During a recent shareholder meeting, Tesla shareholders had an ambivalent response to a proposal that requested the board to make such an investment, and it is now up to the board to decide.
Before the meeting, Tesla Chair Robyn Denholm informed the Journal that she asked about the logic of such investment, and she stated that the board had not done any of the due diligence necessary to proceed with it yet.
The AI company of Musk has raised billions of dollars in its quest to be able to counter OpenAI and to scale the abilities of its chatbot, Grok, that competes with ChatGPT.
Meanwhile, News Corp, owner of the Journal, has a content-licensing partnership with OpenAI. The Journal reported that Musk shifted his focus to xAI after concluding his operations with the federal government.
Eventually, the startup has recently lost many senior executives, such as X CEO Linda Yaccarino, and the chief financial officers of X and xAI.
