IA: Musk’s company seeks investments of US$ 6 billion – 01/28/2024 – Tech

Elon Musk’s artificial intelligence startup is in talks to raise up to US$6 billion (R$29.45 billion), as the head of Tesla and X (formerly Twitter) seeks global investors to fund the xAI that aims to challenge the OpenAI, owner of Microsoft-backed ChatGPT.

Musk’s new project has been courting rich people and investors around the world in recent weeks, according to several people familiar with the matter.

According to four people interviewed by the report, these negotiations included families in Hong Kong, a territory that is increasingly controlled by Beijing.

Three people with knowledge of the talks said Musk hoped to raise up to $6 billion in equity capital for xAI, with a proposed valuation of $20 billion. However, people warned that negotiations were ongoing and that the Tesla boss was still testing investors’ appetite for such large sums.

One person said he had even targeted sovereign wealth funds in the Middle East, while others said investors in Japan and South Korea had also been approached.

Raising money in Hong Kong for a US artificial intelligence company could become a politically fraught process as geopolitical tensions rise.

Washington has sought to impose export controls to hinder China’s development of advanced technologies. The Biden administration last year banned some U.S. investments in Chinese AI, including in Hong Kong.

Musk’s xAI launched its first product in December, a chatbot called Grok, which is being trained using social media posts on X, allowing it to give more up-to-date responses than its competitors.

Investment bank Morgan Stanley — which in 2022 helped finance Musk’s leveraged buyout of X — is coordinating the fundraising, one of the people said. The bank declined to comment. Musk did not respond to an email seeking comment.

The multi-pronged search for resources reflects the enormous costs required to develop generative AI — models that produce human-like text, images and code in seconds — which require enormous computing power, vast amounts of data and cutting-edge chips.

OpenAI, based in San Francisco (USA), raised around US$13 billion from Microsoft alone. Other startups, like Anthropic and Cohere, have also raised billions of dollars from companies like Google, Amazon and other major Silicon Valley venture capital groups.

Based in Nevada (USA), xAI filed documents with the SEC in December that showed it was seeking to raise $1 billion in financing from equity investors.

The presentation showed that US$135 million had already been raised. A Bloomberg report in January said fundraising reached $500 million. Musk said on X that the report was “fake news.”

Musk was a founding investor in OpenAI, but stepped aside in 2018 due to disagreements with CEO Sam Altman. The billionaire launched his own AI company in July last year, complaining that competitors such as OpenAI, Microsoft and Google were censoring their AI products and not focusing enough on security measures.

OpenAI is conducting a secondary sale of some of its employee shares in a deal that values ​​the San Francisco-based business at $86 billion.

Musk did not reveal details about how xAI would be funded, other than a post on X in November that said current X shareholders would “own 25% of the company” without further explanation.

X’s backers, who helped Musk finance the $44 billion acquisition of the social network, include the head of Oracle (Larry Ellison), Sequoia Capital (Andreessen Horowitz), Fidelity Management and Saudi Prince Alwaleed bin Talal.

Fidelity recently reduced the value of its investment in X by about 70%, valuing the company at about $12.5 billion.