Tech mogul Elon Musk’s AI startup xAI is set to raise up to $4 billion for its AI chatbot Grok through special purpose vehicles (SPVs), a method that allows multiple investors to participate via a single entity, according to Business Insider.
This approach incurs upfront fees of up to 5%, along with management fees and interest. xAI seeks to reach a valuation of $18 billion post-funding, with funding rounds expected to close within 2-3 weeks.
Founded by Musk in March 2023 and headquartered in the San Francisco Bay Area, xAI boasts a mission of uncovering the universe’s true nature. Its flagship product, the X-linked chatbot Grok, claimed superiority over ChatGPT in November.
The startup emphasizes Musk’s success at Tesla and the AI model’s training on data from his X microblogging network to attract investors.
Mario Nawfal, an entrepreneur and angel investor, voiced concerns over potential AI market bubbles amidst escalating valuations and development costs. xAI employs a diverse team of in-house AI tutors for data curation and model training, though it remains relatively small with around 10 engineers and 5,000-10,000 GPUs.
Despite the buzz, xAI faces stiff competition in the AI chatbot space, including from OpenAI’s ChatGPT, Antropic’s Claude, and others. Efforts like making Grok open source to challenge ChatGPT demonstrate xAI’s ambition in this competitive field.
Also Read: Elon Musk’s xAI to Launch Grok-1.5 Chatbot on X Next Week
