Elon Musk’s OpenAI Rival xAI Is Raising $6 Billion in Funding

Elon Musk’s xAI, which came to the market 10 months ago to compete with OpenAI, has raised almost $6 billion in funding, according to a trusted source closely linked to the deal. Providing the terms of the deal are not altered, it’s anticipated that the agreement, which would give investors a quarter of the company, will be finalized in the next few weeks.

The terms of the deal have already shifted once. Last weekend, Jared Birchall, head of Musk’s family office, informed prospective investors that xAI was raising $3 billion at a $15 billion pre-money valuation. With the amount of investors wanting a piece of the pie, the numbers were swiftly altered.

The source said, “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.’”

Investors who have been keen to join the deal for months were not bothered at all. Sequoia Capital and Future Ventures, the venture fund co-founded by Steve Jurvetson, a longtime friend of Musk, are joining the round.

Further possible participants could include Valor Equity Partners and Gigafund, whose founders are also closely linked to Musk and are well-known for mixing personal and private matters. Despite attempts to reach out to these investors, no responses were received, and xAI has not revealed further details on the matter.

Jurvetson is a member of the board of SpaceX and was a director at Tesla until 2020. Luke Nosek, co-founder of Gigafund who previously co-founded Founders Fund with investor Peter Thiel, was the initial venture investor to back SpaceX and has been on its board ever since. Antonio Gracias, founder of Valor Equity Partners, was among Tesla’s initial investors and, much like Jurvetson, he is a former Tesla director and also serves on the board of SpaceX.

According to the source, the exact participants in the deal are not fully clear to other investors due to the method used to secure commitments. “It’s a Zoom call and it’s just you and Elon and Jared [on the other side] at a table with some engineers,” they said.