In a bid to challenge the dominance of AI powerhouse OpenAI, xAI, a 10-month-old venture backed by Elon Musk, is on the brink of securing a staggering $6 billion in funding, valuing the company at $18 billion, as revealed by a trusted source close to the negotiations.
The deal, anticipated to be finalized within weeks, has already undergone a significant adjustment from its initial terms.
Initially poised to raise $3 billion at a $15 billion pre-money valuation, the overwhelming demand from investors swiftly prompted a revision, doubling both the fundraising target and valuation.
According to insider reports, prospective investors were informed of the revised terms through an email communication, emphasizing the heightened interest in the deal and dissuading any objections.
“We all received an email that basically said, ‘It’s now $6B on $18B, and don’t complain because a lot of other people want in,'” shared the undisclosed source.
Despite the amended terms, investors, including heavyweights like Sequoia Capital and Future Ventures, led by Musk’s close associate Steve Jurvetson, remain undeterred in their pursuit of a stake in xAI.
Additional notable participants are expected to include Valor Equity Partners and Gigafund, both boasting strong ties to Musk’s inner circle.
Gigafund’s co-founder Luke Nosek, a pivotal figure in SpaceX’s early investment landscape, and Valor founder Antonio Gracias, a longstanding supporter of Tesla, further underline the formidable backing behind xAI.
The allure of the deal is compounded by the exclusive nature of the fundraising process, with select investors granted access to intimate Zoom sessions featuring Musk, alongside key figures like Jared Birchall, head of Musk’s family office, and a cadre of engineers.
However, transparency regarding the complete roster of investors remains a point of ambiguity, with some participants expressing uncertainty about the exact composition of the investment cohort.
“It’s a Zoom call and it’s just you and Elon and Jared [on the other side] at a table with some engineers,” elucidated the source, shedding light on the unique dynamics of the fundraising process.
As xAI prepares to secure its financial footing with this monumental funding round, the stage is set for a compelling showdown in the competitive landscape of artificial intelligence, as the burgeoning contender gears up to challenge the established titans of the industry.
