Among so many businesses that involve Elon Musk, xAI It is one of the most incipient. The artificial intelligence startup is less than a year old, but it has already launched its first product: Grok, the chatbot integrated into X (Twitter). And everything indicates that the businessman has begun to talk to potential investors to expand the company’s financing.
According to Financial TimesElon Musk has started talks to raise 6 billion dollars for xAI, at a proposed valuation of $20 billion. With this capital, the firm would aspire to establish itself more strongly as a competitor of OpenAI, the main reference in the artificial intelligence sector.
Although the information is unofficial, the leader of Tesla, SpaceX and X (Twitter) would analyze several alternatives. On the one hand, it is mentioned an apparent rapprochement with Hong Kong; specifically, to some family offices based there. It is worth clarifying that a family office is a private company that manages the investment portfolio of wealthy families, with fortunes that are generally above $100 million.
Elon Musk, seeking financing for xAI
On the other hand, Elon Musk would also be testing the interest of some Middle East sovereign wealth funds, although it is not mentioned precisely which ones. In any case, the tycoon already has to some extent some type of relationship with the two most important—and controversial—. We are talking, of course, about those from Saudi Arabia and Qatar.
Let us remember that Saudi Prince Alwaleed bin Talal, through the company Kingdom Holding Company (KHC), was a shareholder in Twitter before the social network was purchased by Elon Musk. As you can imagine, part of KHC belongs to the Public Investment Fund (PIF), the Saudi sovereign fund. Meanwhile, when the businessman sought financing to close the purchase of Twitter, the list of investors included Qatar Holding LLCa subsidiary of Qatar Investment Authoritythe Qatari investment fund.
Considering that these sovereign funds have shown increasing interference in the technology sector—especially in video games and telecommunications—it would not be surprising if xAI is presented as an attractive option. In any case, we will have to wait to know if they are really involved in any type of negotiation or conversation about it.
Beyond the apparent approach to wealthy families in Hong Kong and sovereign funds in the Middle East, Elon Musk would seek financing in other sectors in Asia. According to Financial Times, investors from South Korea and Japan would also have been contacted to approach xAI’s proposal. However, no further details are provided.
The aforementioned media indicates that the coordination of the search for capital is in charge of Morgan Stanley. Again, it would not be surprising if this turned out to be true, since this institution was one of those that financed the purchase of Twitter in 2022.
Will fresh capital arrive from Asia?
Beyond Grok, the X chatbot that, according to Elon Musk, is an untethered ChatGPT, little is known about xAI projects. The startup has recruited to engineers and researchers with experience in the field of artificial intelligence. Mostly from OpenAI, Google Research and Deepmind, Tesla, Microsoft Research and the University of Toronto.
The $6 billion in financing that Elon Musk is pursuing is likely to seek to expand the company’s human and technological capabilities. Especially, knowing that the development of massive language models (and the applications that take advantage of them) It is very expensive. Furthermore, OpenAI, the main reference in the sector, not only has the technical advantage, but also has the endorsement of Microsoft and its robust checkbook.
It will be interesting to see if the search for financing in Asia, especially in Hong Kong and the Middle East, does not set off some alarm bells in the United States. China’s growing interference in Hong Kong territory is a cause for concern in the White House, and everything related to the development and investment in artificial intelligence takes time causing short circuits between the Americans and the Asian giant. The ban on the export of the most advanced GPUs from NVIDIA and AMD to China is clear proof of this. We will follow the matter closely.