Elon Musk’s AI spinoff is seeking $4B that could level up Grok: Report

Musk is seeking investors to back his ChatGPT rival, Grok, which has entered a crowded AI chatbot marketplace.

Tech entrepreneur Elon Musk is seeking to raise up to $4 billion for his artificial intelligence (AI) startup xAI, the inventor of the X-linked AI chatbot Grok. 

Select investors are reportedly being offered the chance to participate in funding rounds for the AI startup through special purpose vehicles (SPVs), according to an email sent to potential investors. 

SPV structures allow different venture capital firms and individuals to invest together through a single entity. However, there are upfront fees of up to 5% and management fees and interest to be added on, according to reports.

Reports also reveal that Musk is looking to raise $3 billion–$4 billion in a deal that could value the company at $18 billion following the completion of the funding round, and the firm “expects to raise the funds in the next 2–3 weeks on a first-come, first-served basis.”

XAI was founded by Musk in March 2023 and launched in July of that year and is headquartered in the San Francisco Bay Area in California. The firm has the lofty ambition of “understanding the true nature of the universe.”

The firm launched its first product in November, claiming that its X-linked chatbot Grok can outperform ChatGPT.

The email pitch reportedly highlighted potential selling points for investors, including Musk’s track record at Tesla and the training of the AI model on data from Musk’s microblogging network X.

Entrepreneur and angel investor Mario Nawfal commented on the news, stating that as AI investments skyrocket with billions flowing into startups, “concerns about an AI bubble grow amid soaring valuations and high development costs.”

XAI’s in-house AI tutors hail from a wide array of fields and are tasked with creating and curating high-quality data for training and evaluating its models, according to the official website.

Related: Groq AI chip system goes viral and rivals ChatGPT, challenges Elon Musk’s Grok

In March, Musk said that xAI was making the AI chatbot open-source to challenge OpenAI’s closed ChatGPT model.

However, xAI remains a small startup despite its multibillion-dollar valuation, with just 10 full-time engineers and between 5,000 and 10,000 GPUs, according to reports.

Cointelegraph reached out to xAI for further details but did not receive an immediate response.

Grok is part of a crowded AI chatbot marketplace with competitors such as OpenAI’s ChatGPT, Antropic’s Claude, Microsoft’s Copilot, Google’s Gemini and Meta AI from the company formerly known as Facebook.

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