xAI, Elon Musk’s OpenAI rival, is closing on $6B in funding and X, his social network, is already one of its shareholders | TechCrunch

xaiElon Musk’s 10-month-old competitor to AI phenom OpenAI is raising $6 billion at a pre-money valuation of $18 billion, according to a source close to the deal. The deal – which will give investors a quarter of the company – is expected to close in the next few weeks unless the terms of the deal change.

The terms of the deal have changed once before. As of last weekend, Jared Birchall, who heads Musk’s family office, was telling potential investors that xAI was raising $3 billion at a pre-money valuation of $15 billion. Given the number of investors eager to get involved in the deal, those numbers were quickly adjusted.

Our source says, “We all received an email that basically said, ‘It’s now $6B at $18B, and don’t complain because there are a lot of other people wanting to get in too.’

Investors who had been lobbying to be included in the deal for months faced hardly any objections. Sequoia Capital and Future Ventures, the venture fund co-founded by Musk’s longtime friend Steve Jurvetson, are participating in the round.

Other participants are likely to include Valor Equity Partners and GigaFund, whose founders are also part of Musk’s inner circle, who famously blends the personal and private. (Access to these investors was not returned; XAI has no press engagement.)

Jurvetson sits on the board of SpaceX and was a director at Tesla until 2020. GigaFund co-founder Luke Nosek, who previously co-founded Founders Fund with investor Peter Thiel, was the first venture investor to write a check to SpaceX and sit on it. It has had a board since then. Valor founder Antonio Gracias was among Tesla’s early investors; Like Jurveston, he is a former Tesla director and also sits on the board of SpaceX.

Our source said that because of the way the commitments were secured, it is not completely clear to every other investor involved in the deal. “This is a Zoom call and it’s just you and Elon and Jared [on the other side] At a table with some engineers.”

This person says the pitch is captivating.

XAI’s marketing literature already makes clear that the organization’s ambition is to connect the digital and physical worlds, but it may not be widely understood that Musk plans to do this by pulling training data from each of his companies, including Tesla, SpaceX, his company are included. Tunneling organizations The Boring Company and Neuralink, which develop computer interfaces that can be implanted in the human brain.

Of course, Musk has another company, X. The social media platform has already included XAI’s months-old chatbot, Grok, as a paid add-on to the platform.

But what Musk has told investors is that it will become a giant virtual circle. For example, with Grok, X is a customer and provides large-scale distribution to Grok. Eventually (the pitch goes), Grok will be fed data from Musk’s other companies, helping it master the physical world in potentially endless ways, starting with truly self-driving cars.

Another potential beneficiary would be Tesla’s humanoid robot, Optimus. Today the Tesla robot is still in the lab, but Musk told analysts It was said on a call earlier this week that Optimus will be able to operate in Tesla factories by the end of this year. Even if that timeline proves ambitious, if Musk’s broader vision works, these clever assistants may be able to do more — and faster — than previously imagined.

Meanwhile, the most immediate beneficiary of XAI’s rising momentum may be X itself. However the platform has become a toxic cesspool 1.5 years Since Musk bought it and later lost it its worth a lotMusk has already noted that X has a stake in XAI, so he will benefit from whatever profits the AI ​​organization sees.

What this means for OpenAI — which last year became the fastest-growing startup in history — is an open question. Musk has taken aim at OpenAI after the company began booming following the release of the ChatGPAT chatbot.

Musk co-founded OpenAI in 2015 and left its board in 2018 due to disagreements about the direction of the organization, which began life as a nonprofit and later evolved into a for-profit entity. . Musk then publicly insulted OpenAI co-founder Sam Altman and mocked the brand, proposing that he call himself that instead. closed ai,

Last month, when Musk open source The architecture of XAI’s oldest chatbot “Grok-1”, meaning anyone can now download and change it, was another part of an ongoing campaign to separate its efforts from OpenAI, which has Who hasn’t shared his secret sauce with, and that’s Musk now suing,