Elon Musk‘s artificial intelligence startup, xAI, has raised $6 billion in a Series C funding round.
Andreessen Horowitz, Blackrock, Fidelity, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD, and others were among those that took part, the business stated this week.
According to a public filing, Kingdom Holdings, the Saudi conglomerate holding company, contributed about $400 million to the round. Additionally, the filing disclosed that xAI’s current valuation is $45 billion, about double its prior worth.
The additional funding adds to the $6 billion tranche that xAI raised in May, bringing the total amount raised to $12 billion.
The Financial Times claims that only investors who had supported xAI in its prior fundraising round were allowed to take part in this one. According to reports, up to 25% of xAI’s shares were made available to investors who contributed to Musk’s acquisition of Twitter.
“We are now focused on launching innovative new consumer and enterprise products, and xAI’s most powerful model to date is currently training,” the company stated in a statement. “We will use the money from this financing round to ship innovative products, accelerate research and development, and further accelerate our advanced infrastructure.”
Increasing AI
shortly after. It currently drives several X features, such as a chatbot that is available to X Premium subscribers and free users in some areas.
According to Musk, Grok has “a rebellious streak” and is prepared to respond to “spicy questions that are rejected by most other AI systems.” For instance, if you tell Grok to be nasty, he will gladly comply, using foul language and colorful words that ChatGPT won’t use.
Despite Grok’s own reluctance to cross certain lines and avoid discussing politics, Musk has criticized ChatGPT and other AI systems for being too “woke” and “politically correct.” Although there is evidence that Grok leans left, he has also described Grok as “maximally truth-seeking” and less biased than rival models.
Grok has gotten more and more integrated into X, the social network that was formerly known as Twitter, within the past 12 months. Only X users and developers with the necessary skills could get the “open source” version of Grok up and running at launch.
Grok is able to produce images on X (controversially without guardrails) through an integration with xAI’s proprietary image production model, Aurora. The model can also, however inaccurately, summarize news and trending events and assess photos.
According to reports, Grok may eventually manage even more X features, such as improving X’s search and account bios and assisting with reply settings and post analytics. In order to assist users in finding “relevant context” and delving further into popular conversations and current events, X just included a “Grok button.”
In the fight for generative AI, xAI is racing to overtake strong rivals like OpenAI and Anthropic. In October, the business released an API that enables users to integrate Grok into third-party platforms, apps, and services. Additionally, it just released a stand-alone Grok iOS app to a test user base.
According to Musk, the battle hasn’t been fair.
Musk’s lawyers accuse OpenAI of “actively trying to eliminate competitors” like xAI by “extracting promises from investors not to fund them” in a lawsuit against OpenAI and Microsoft, OpenAI’s close partner. According to Musk’s legal team, OpenAI also unfairly gains access to Microsoft’s infrastructure and experience through what they call a “de facto merger.”
However, Musk frequently claims that X’s data offers xAI an advantage over competitors. X modified its privacy policy last month to permit xAI and other third parties to train models on X content.
Notably, Musk was one of the initial founders of OpenAI before departing the firm in 2018 due to differing opinions on its course. In earlier lawsuits, he claimed that OpenAI had benefited from his early engagement but had broken its nonprofit promise to make the results of its AI research publicly available.
It should come as no surprise that OpenAI rejects Musk’s version of events. The business described Musk’s complaint as deceptive, unfounded, and a case of sour grapes in a news release issued in the middle of December.
An ecology of xAI
In keeping with xAI’s objective, its models would be taught using data from Musk’s several businesses, such as SpaceX and Tesla, and the models might subsequently advance technology across those businesses. According to The Wall Street Journal, SpaceX’s Starlink internet service already uses xAI to provide customer care, and the startup is also in negotiations with Tesla to contribute R&D in exchange for a portion of the automaker’s profits.
One group of people who are against these proposals is Tesla shareholders. A number of lawsuits have been filed against Musk over his decision to launch xAI, claiming that he has transferred resources and people from Tesla to what is effectively a rival business.
However, the transactions, along with xAI’s developer and consumer-facing products, have increased xAI’s annual income to almost $100 million. In contrast, OpenAI is aiming for $4 billion by the end of 2024, while Anthropic is supposedly on track to make $1 billion this year.
This summer, Musk said that xAI is using its Memphis data center, which was reportedly constructed in just 122 days and is presently partially powered by portable diesel generators, to train the next generation of Grok models. In a press release, xAI stated that it intends to completely increase the amount of Nvidia GPUs in the server farm, which is expected to be upgraded next year. (GPUs are the preferred processors for training and operating models because to their capacity to do several computations in parallel.)
The Memphis regional power authority granted xAI permission to add 150MW of electricity in November, which is sufficient to power almost 100,000 houses. In an effort to gain the agency’s favor, xAI promised to upgrade the city’s drinking water quality and provide the Memphis grid with cheaper batteries made by Tesla. However, several locals opposed the action, claiming it would put more demand on the grid and degrade the air quality in the area.
It is anticipated that Tesla would enhance its autonomous driving technologies with the help of the renovated data center.
From an operational perspective, xAI has grown significantly in the year after its establishment, going from having only 12 workers in March 2023 to now having over 100. The firm relocated to OpenAI’s former headquarters in the Mission district of San Francisco in October.
xAI has reportedly informed investors that it intends to raise further funds in the upcoming year.
It will not be the only AI lab to raise a significant amount of money. While OpenAI raised $6.6 billion in October to increase its war fund to $17.9 billion, Anthropic just obtained $4 billion from Amazon, increasing its total raised to $13.7 billion.
According to PitchBook data, AI venture capital activity reached $31.1 billion over more than 2,000 deals in Q3 2024, driven by megadeals like those from OpenAI and Anthropic.
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