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Musk’s ‘xAI’ Seeking $6 Billion at $18 Billion Valuation in Battle Against OpenAI, Tapping Tesla, SpaceX Data

Elon Musk’s new AI outfit xAI, formed just 10 months ago as a rival to the generative AI juggernaut OpenAI, is raising a staggering $6 billion at a pre-money valuation of $18 billion, according to a trusted source. The deal, which would grant investors one quarter ownership, is expected to close in the coming weeks barring any last-minute changes to the aggressive terms.

The fundraising details have shifted rapidly due to overwhelming investor demand to get in on Musk’s latest venture at the white-hot intersection of artificial intelligence and his corporate tech empire. Last weekend, xAI was seeking $3 billion at a $15 billion pre-money valuation before increasing the raise amount and valuation.

Major funds like Sequoia Capital, Steve Jurvetson’s Future Ventures, Valor Equity Partners, and Gigafund are confirmed participants. These investors have close links to Musk’s inner circle of trusted allies and longtime business partners across his companies like SpaceX, Tesla, Neuralink, and The Boring Company.

XAI’s bold pitch to investors centers on Musk’s vision to connect the digital and physical worlds by funneling a wealth of real-world training data from his various operations into powerful new AI models. This could turbocharge capabilities in areas like autonomous driving, humanoid robotics, and brain-computer interfaces.

The startup has already integrated its chatbot “Grok” into Musk’s newly acquired Twitter (now X) platform. But Grok represents just the first step, with Musk promising a “virtual cycle” where data from SpaceX rockets, Tesla vehicles, Neuralink brain implants and more continuously enhances xAI’s algorithms to master the physical realm.

Underpinning Musk’s xAI ambitions is an escalating battle against OpenAI, the generative AI pioneer he co-founded in 2015 before an acrimonious split led him to launch a competing effort. Musk has openly mocked OpenAI, proposing to rename it “ClosedAI” for its unwillingness to open-source models like GPT-3, which xAI has already done with an early iteration of Grok.

The fundraising blitz equips Musk with potent ammunition in his AI offensive against OpenAI and others. With a potential $24 billion post-money war chest, unparalleled data flows from Musk’s tech conglomerate, and investors tied to his lotan endeavors, xAI is brazenly positioning itself as the center of Musk’s boundless ambitions to reshape the physical world through artificial intelligence.