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Elon Musk’s AI Startup xAI Secures $6 Billion Funding, Valuing It at $18 Billion

A major Silicon Valley venture capital firm is considering a $6 billion investment in Elon Musk’s AI startup xAI and its chatbot Grok.

According to The Information, Elon Musk is nearing an initial deal with potential investors, including Sequoia Capital, which invested $800 million in X (formerly Twitter) in 2022.

Inside sources did not specify how much Sequoia intends to invest or which other firms may participate in the fundraising, but the Financial Times and Bloomberg confirmed that Sequoia plans to be involved in the deal. Musk has reportedly suggested that companies get in on the first round of funding before competitors start snapping up investments.

Bloomberg noted that the investment would value the company at $18 billion, bringing it close to the valuation of Anthropic, another OpenAI competitor founded by former members of that company, which raised its third round of funding at a valuation of around $18.4 billion in early 2024.

While Musk’s AI startup is still in its early stages of development, venture capital funds appear to be buying into the company’s prospects for outsized returns, riding the wave of AI hype like many firms.

Musk’s AI startup xAI updated its chatbot Grok to the Grok-1.5 language model in early March 2024. This more advanced version of Grok was introduced as a competitor to OpenAI’s ChatGPT and made available to premium users of the X social network.

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