Tesla Inc. CEO Elon Musk‘s artificial intelligence startup, xAI, has reportedly secured $500 million in funding commitments from investors. However, the billionaire founder quickly debunked the news on his social media platform X.
What Happened: Musk’s AI startup is also seeking a potential valuation in the range of $15 billion to $20 billion, although the terms are yet to be finalized, according to a Bloomberg report on Thursday.
xAI, launched by Musk last year as an alternative to Microsoft-backed OpenAI, has developed a chatbot named Grok. The chatbot uses social media posts from X, giving it access to more recent data for its responses compared to its competitors.
Investors who previously backed Musk’s $44 billion takeover of Twitter, including Larry Ellison, Sequoia Capital, Andreessen Horowitz, Fidelity Management & Research Co., and Saudi Prince Alwaleed bin Talal, are also expected to invest in xAI.
Some investors are said to be considering the possibility of obtaining computing power in addition to, or in some cases instead of, xAI equity shares.
Musk, however, has denied the report, calling it “fake news.”
See Also: Elon Musk’s X Is Now Rolling Out Audio And Video Calls On Android
Why It Matters: This funding drive comes after Musk contradicted reports in December that xAI was seeking $1 billion in equity funding. Despite this, the firm had already secured nearly $135 million from four investors at the time, according to a U.S. Securities and Exchange Commission (SEC) filing.
In the same month, Grok was made available to X Premium+ subscribers following testing with a limited set of users. This rollout was implemented on a first-come, first-serve basis.
However, xAI faced controversy when Grok was accused of copying OpenAI’s codebase and mimicking the responses of ChatGPT. This has added a layer of complexity to xAI’s standing in the competitive AI landscape.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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