According to the editor of Downcodes, Musk is actively seeking financing for his artificial intelligence company xAI, with a target valuation of up to US$45 billion, almost double last year’s valuation. The move aims to compete with competitors such as OpenAI and Anthropic and consolidate its position in the field of artificial intelligence. The financing plan attracted huge investments from the Middle East, including investors from countries such as Qatar and Saudi Arabia.
Musk is in financing talks with some large investors in the Middle East and plans to raise funds for his artificial intelligence startup xAI, with a target valuation of nearly $45 billion, which is almost double the company's valuation a year ago.
According to people familiar with the matter, xAI is in preliminary discussions with new and old investors to seek new funds to compete with OpenAI. OpenAI recently completed more than $10 billion in debt and equity financing, and Anthropic and large technology companies such as Google and Meta are also strong competitors.
Musk has reached out to investors in Qatar and Saudi Arabia in hopes of gaining support. At the same time, he also communicated with current investors such as Sequoia Capital and Valor Equity Partners. Sources said a $45 billion valuation has been discussed with investors, a target close to its valuation when it raised capital this summer. Valor is expected to play a leading role in the financing, and Sequoia Capital may also participate, but these talks are still in the preliminary stages and specific participants and valuations are subject to change.
Musk's relationship with Saudi Arabia soured over his attempt to take Tesla private in 2018, when his dispute with the kingdom's sovereign wealth fund attracted widespread attention. However, Musk has been working to restore relations with Saudi Arabia in recent years and spoke at a recent conference with the Saudi Future Investment Initiative. People familiar with the matter said that Musk mentioned the possibility of xAI investment in conversations with Saudi investors, and Saudi Arabia still attaches great importance to investment in artificial intelligence.
In addition, Musk also expressed his financing needs to investors in Qatar, whose sovereign wealth fund has helped him acquire Twitter in the past. Wealthy Gulf states such as Qatar, Saudi Arabia and the United Arab Emirates, which are rich in financial resources and energy, are known to want to take a leadership role in artificial intelligence.
Funding for AI startups is growing rapidly as OpenAI launches its popular chatbot ChatGPT in late 2022. In the first half of this year, AI startups attracted more than 40% of U.S. venture capital investment. At the same time, startups that are building powerful language models are under intense financial pressure and need to rely on wealthy investors, chip manufacturers and cloud service providers to meet the financial and technical requirements of training models.
xAI’s high financing targets and potential investments from the Middle East demonstrate the fierce competition in the field of artificial intelligence and the huge demand for funds. The final financing results remain to be seen, but they will undoubtedly have an important impact on the artificial intelligence industry landscape. The editor of Downcodes will continue to pay attention to the progress of the incident.