Elon Musk's Refutation: No $500M Raised for AI Company xAI Amid Valuation Talks
Summary:
Elon Musk refutes a report that his AI company, xAI, raised $500 million, half of their $1 billion goal. Musk announced this misinformation on X, the rebranded Twitter. As per Bloomberg, ongoing discussions regarding xAI's valuation, ranging between $15 and $20 billion, are currently underway. In November 2023, Musk revealed plans for equity investors in X to own a 25% stake in xAI, encouraging investors to back the new venture. Last year, Musk initiated xAI as an alternative to OpenAI, launching chatbot Grok. As of December 2023, xAI privately sold unregistered equity securities worth $865.3 million under restrictions of rule 506(b), with the ultimate aim of raising $1 billion.
Elon Musk refuted the claims of a report suggesting that his artificial intelligence (AI) firm, xAI, amassed $500 million from supporters, midway to their fundraising target of $1 billion. Musk proceeded to clarify the falsehood of this report on X (formerly known as Twitter), bluntly stating, “This is not accurate,” in response to the news piece by Bloomberg. As per details divulged to Bloomberg, conversations are underway about estimating xAI's worth between $15 billion to $20 billion, with the likelihood of recalibration in the near future.
Bloomberg claims that negotiations between Musk and the investors over the final terms are ongoing, exploring the potential of gaining access to computational power, either as a complementary or alternative gain to shares in xAI. Back in November 2023, Musk shed light on the fact that equity investors in X would ultimately hold a 25% stake in xAI. Based on this, Bloomberg suggests that these investors are being motivated to invest a minimum of 25% of their input in X into xAI. To illustrate, an investment of $10 billion in X would entail a minimum investment of $2.5 billion in xAI.
Musk started xAI the previous year as a substitute for OpenAI, prompted by existing ideological disparities. Grok, the firm's chatbot, utilizes social media input from the X platform, allowing for more current responses compared to its competitors.
In December 2023, xAI made a confidential agreement to sell unregistered equity securities worth $865.3 million, as reported by the U.S. Securities and Exchange Commission. The document relating to form D of xAI stated that such securities would be sold to approved investors under the limitations of rule 506(b). It has been mentioned in the report that securities amounting to $134.7 million have already been sold off, with the first sale taking place on 29th November 2023. Consequently, the company's aim is to increase funds up to $1 billion.
Published At
1/21/2024 11:25:50 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.