Elon Musk’s ChatGPT-killer xAI to raise $1 billion to invest in Grok, other bots, take on OpenAI

xAI, the artificial intelligence startup founded by tech mogul Elon Musk, has filed with the Securities and Exchange Commission (SEC) to raise up to $1 billion in an equity offering.

The company has already secured nearly $135 million from four investors, with the first sale taking place on November 29. According to the filing, xAI has a “binding and enforceable agreement” for the purchase of the remaining shares.

The AI startup, introduced by Musk in July, aims to “understand the true nature of the universe,” as stated on its website. Recently, xAI unveiled a chatbot named Grok, inspired by “The Hitchhiker’s Guide to the Galaxy,” claiming real-time knowledge of the internet after two months of training.

xAI faces competition from companies such as OpenAI, creator of ChatGPT, in which Musk was involved before departing in 2018.

The startup also competes with Google’s Bard technology and Anthropic’s Claude chatbot. Musk reportedly secured thousands of high-powered graphics processing units (GPUs) from Nvidia earlier this year, crucial for building large language models like those employed by xAI.

Elon Musk is deeply involved in various ventures, including xAI, Twitter (which he purchased last year), Tesla, SpaceX, the Boring Company, and Neuralink. Investors in xAI, formerly Twitter, are expected to own 25 per cent of the company, according to Musk’s previous statements.

xAI’s team comprises individuals with backgrounds at renowned organizations like DeepMind, OpenAI, Google Research, Microsoft Research, Twitter, and Tesla. They have worked on projects including DeepMind’s AlphaCode and OpenAI’s GPT-3.5 and GPT-4 chatbots.

Musk incorporated xAI in Nevada in March, and on a Tesla earnings call in July, he explained that the startup’s genesis was driven by the availability of top AI talent more willing to join a startup than a larger, established company like Tesla.

(With inputs from agencies)