Report: Elon Musk’s xAI seeking up to $6B from investors at $20B valuation

AI

A few weeks after rumors emerged that xAI Corp. is seeking $1 billion from investors, a new report indicates that Elon Musk’s artificial intelligence startup has set a more ambitious fundraising target.

Sources told the Financial Times today that the company is in talks to raise as much as $6 billion. According to the paper, xAI could receive the capital from Hong Kong-based family offices and sovereign wealth funds in the Middle East. It’s believed the deal could close at a valuation of $20 billion.

Musk launched xAI last June to take on OpenAI in the large language model market. This past December, a regulatory filing revealed that the company had raised $135 million from investors to support product development. So far, it has built a chatbot called Grok that can answer user questions, generate code and perform related tasks.

According to xAI’s website, Grok runs in a Kubernetes-powered software container environment. Much of the code that powers the environment was written in the Rust programming language. Grok itself, meanwhile, was created with JAX, an open-source AI framework from Google LLC that helps developers write hardware-efficient neural networks.

The chatbot took four months to develop. The first iteration, Grok-0, featured 33 billion parameters and is said to have “approached” the capabilities of Llama 2, a popular open-source language model from Meta Platforms Inc. with more than twice as many parameters. The current version of Grok promises to outperform GPT-3.5, a predecessor to OpenAI’s flagship GPT-4 model, across several AI benchmarks.

Going forward, xAI plans to equip the chatbot with support for formal verification. That’s a mathematical technique engineers use to ensure a hardware system they’ve built is reliable. Formal verification involves simulating all the possible situations in which a system might be used to find potential issues.

On its website, xAI indicates that Grok will use the technology to ensure the reliability of the code it generates. Formal verification can be used to simulate issues in not only hardware systems but also applications. The method lends itself to, among other tasks, finding cybersecurity issues in software code.

Recent reports indicate that xAI is not the only generative AI provider currently in talks to raise funding. 

Bloomberg reported today that Sierra, a newly launched AI startup, is close to securing a $85 million funding round at a $1 billion valuation. The company was founded last year by former Salesforce co-Chief Executive Bret Taylor and Clay Bavor, former vice president of Google’s Labs product development group. Sequoia Capital is expected to lead the investment.

Earlier, CNBC reported that Anthropic PBC is seeking to raise $750 million in fresh funding. It’s believed the investment could value the large language model developer at up to $18.4 billion. 

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