In an attempt to challenge OpenAI, Elon Musk is looking for $4 billion in financing for his AI company, xAI.

Known for his audacious business endeavors, Elon Musk is now focusing on OpenAI with a daring strategy for his AI company, xAI. Musk is looking to invest $3–4 billion in order to acquire a large chunk of the infrastructure that is required for the creation of AI models. With this fundraising effort, xAI may be worth an incredible $18 billion after the funding round.

Tech entrepreneur Elon Musk, the brains behind xAI and the X-linked AI chatbot Grok, is trying to raise $4 billion in cash to take on OpenAI and get his hands on some of the crucial technology infrastructure needed to operate an AI business.

According to reports from Bloomberg, Musk approached investors by way of special purpose vehicles (SPVs), which enable a number of venture capital firms and private investors to combine their funds into a single, cohesive company.

Although there are benefits to this cooperative investing strategy, there are also up-front costs of up to 5% as well as continuing management fees and interest. Diverse venture capital firms and individuals can pool their investments thanks to SPV models.

Musk’s aggressive fundraising efforts have the potential to propel xAI to an astounding $18 billion post-funding round valuation. The company intends to secure the funds in the next two to three weeks, on a first-come, first-served basis.

xAI, which Musk founded in March 2023 and formally debuted in July of the same year, is based in the thriving San Francisco Bay Area, a major hub for technology. The company’s grand goals are to solve the secrets of the universe.

The X-linked chatbot Grok, the main product of xAI, was unveiled in November. It is said to have more capabilities than ChatGPT, the industry standard for text-based GenAI at the moment.

The pitch made by xAI to potential investors emphasizes Musk’s accomplishments at Tesla as well as the AI model’s training using data from his personal microblogging network, X.

A group of AI tutors from a variety of disciplines work behind the scenes at xAI, producing and selecting high-quality data that is used to train and improve its models.

According to estimates, xAI is a rather lean organization with just 10 full-time engineers and a modest fleet of 5,000–10,000 GPUs, despite its multibillion-dollar valuation.

With its open-source approach to AI chatbots, xAI hopes to upend the business, but it is up against a large field of competitors, including Microsoft’s Copilot, Google’s Gemini, Antropic’s Claude, OpenAI’s ChatGPT, and Meta AI.

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