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Musk Denies His Ai Startup Secured $500 Million Toward Its $1 Billion Funding Goal

January 21, 2024
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Elon Musk's venture into artificial intelligence, xAI, has successfully secured commitments from investors amounting to $500 million, marking a significant stride towards its ambitious $1 billion funding goal, according to a report by TradeAlgo.

The company, currently contemplating a valuation ranging between $15 billion and $20 billion, has emphasized that these terms may undergo adjustments in the weeks to come. In response to the reported figures, Musk took to X, the social network previously known as Twitter, dismissing the news as "fake."

Having initiated this startup as an alternative to Open AI, a venture he co-founded but later parted ways with due to divergent views on how to capitalize on the technology, Musk's company has unveiled a unique product – a chatbot named Grok. Notably, Grok's development involves leveraging social media posts on X, a platform also owned by Musk.

Report suggests a probable overlap in investors between xAI and Musk's other high-profile ventures. Noteworthy backers of Musk's $44 billion acquisition of Twitter reportedly include influential names such as Larry Ellison, Sequoia Capital, Andreessen Horowitz, Fidelity Management & Research Co., and Saudi Prince Alwaleed bin Talal.

In a statement made last November, Musk disclosed that equity investors in xAI would ultimately possess a 25% stake in the company. The finalization of terms between Musk and these investors is anticipated in the coming weeks.

Contrary to the recent reports, Musk vehemently denied the claims. In a direct response to a post on the article on the X platform, he insisted, “This is simply not accurate,” as reported by Reuters.

Interestingly, just a month prior in December, Musk had stated that his artificial intelligence venture had no plans to raise funds. This declaration followed a filing with the U.S. Securities and Exchange Commission, revealing the startup's intention to initiate an equity offering with a fundraising target of up to $1 billion.

The inception of xAI in July of the preceding year was a direct response to Musk's critique of the artificial intelligence endeavors undertaken by major tech corporations. Musk has consistently voiced concerns regarding what he perceives as excessive censorship and insufficient safety measures in the AI initiatives led by these industry giants. This venture represents Musk's proactive approach to carve out a space for ethical and safety-focused AI development, addressing the pitfalls he identifies in the existing landscape dominated by Big Tech.

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Cathy Hills
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