Elon Musk’s xAI Set to Raise $4B for Grok AI via SPVs

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Elon Musk’s tech company xAI, led by tech magnate Elon Musk, is planning to secure up to $4 billion for its AI chatbot Grok through the use of Special Purpose Vehicles (SPVs). This financing approach enables various investors to join in collectively via a single entity, as reported by Business Insider.

Using this method, you may pay an initial fee of as much as 5% alongside management fees and interest charges. xAI aims to achieve a market value of $18 billion following investment, and fundraising sessions are projected to conclude within a fortnight to three weeks.

Established by Musk in March 2023 and located in the San Francisco Bay Area, xAI focuses on revealing the real essence of the universe. The leading product from xAI, named Grok, was declared superior to ChatGPT in November.

This startup highlights Musk’s achievement with Tesla and utilizes data from his X microblogging platform for training its AI model, to captivate potential investors.

Mario Nawfal, an entrepreneur and investor in artificial intelligence (AI), expressed worries about possible AI market bubbles due to rising valuations and expenses for development. At xAI, we have a team of various AI specialists on staff for data preparation and model instruction, but the company is still relatively small, with approximately 10 engineers and between 5,000 and 10,000 GPUs in use.

Although there’s a lot of excitement surrounding xAI, it encounters significant competition in the AI chatbot market from the likes of OpenAI’s ChatGPT, Antropic’s Claude, and other contenders. xAI’s determination to compete is evident through its initiative to make Grok open source, aiming to challenge ChatGPT.

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2024-04-12 10:12