May 27, 2024 - Business

Elon Musk raises $6 billion to challenge OpenAI

Photo illustration of Elon Musk. — Photo illustration: Shoshana Gordon/Axios. Photo: Christian Marquardt - Pool/Getty Images

Elon Musk's AI startup — xAI — announced that it has raised $6 billion in one of the largest venture capital funding rounds of all time.

Why it matters: This could help Musk begin to catch up with ChatGPT maker OpenAI, which he co-founded before leaving in a dispute that's become litigious.

The intrigue: Some of the xAI investors, such as Andreessen Horowitz and Sequoia Capital, also backed OpenAI.

Zoom in: All of the $6 billion is new money, Musk tells Axios, rather than shares "given" to investors in Musk's takeover of Twitter/X.

That said, there's plenty of overlap in the investor list, and it's unclear if the original Twitter/X backers also received additional equity in xAI, which Musk says is now valued at $24 billion.
In addition to Andreessen and Sequoia, investors in the Series B round include Valor Equity Partners, Vy Capital, Fidelity, Craft Ventures, Prince Alwaleed Bin Talal and Kingdom Holding.

The bottom line: xAI didn't say much about what the new money will go toward, but The Information recently reported that it plans to build a massive new supercomputer — the "Gigafactory of compute" —possibly in partnership with Oracle.

Go deeper: xAI in the "Muskonomy"

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Elon Musk raises $6 billion to challenge OpenAI

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