Elon Musk’s Startup X.AI Files for $1 Billion Equity Offering… Or Is It A Rescue Plan For X?

In a recent development, artificial intelligence startup X.AI, founded by 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 garnered significant interest, securing nearly $135 million from four investors, with the first sale occurring on Nov. 29.

According to the filing, X.AI has a “binding and enforceable agreement” for the purchase of the remaining shares. The startup, announced by Musk in July, sets out with the ambitious goal of “understanding the true nature of the universe,” as stated on its website.

Last month, X.AI unveiled its latest creation, a chatbot named Grok, inspired by “The Hitchhiker’s Guide to the Galaxy.” Grok, equipped with two months of training, boasts real-time knowledge of the internet, and the company claims it is designed to answer questions with humor and a rebellious streak, differing from most other AI systems.

X.AI aims to position itself in direct competition with industry players such as ChatGPT creator OpenAI, Google’s Bard technology, and Anthropic’s Claude chatbot.

Musk, who reportedly secured high-powered graphics processing units (GPUs) from Nvidia earlier this year, has a diverse portfolio of companies under his leadership, including X.AI. The startup, distinct from Musk’s other ventures, is set to work closely with X (formerly Twitter), Tesla, and other Musk-led companies to advance its mission.

Addressing concerns about potential competition with Tesla, Musk explained on a Tesla earnings call in July, “There were just some of the world’s best AI engineers and scientists that were willing to join a startup but they were not willing to join a large, sort of relatively established company like Tesla.”

The offering comes on the heels of Musk facing revenue strains for his social media platform X, after advertisers have started pulling out due to the top honcho’s colorful remarks on the ongoing Israel-Palestine conflict.

The Walt Disney Company and Apple have both decided to halt its spending on X. Additionally, two other media giants, Paramount Global and Warner Bros. Discovery, conveyed that they, too, were suspending their advertising on X.

READ: Elon Musk’s Antisemitic Era: Tesla Bulls Changing Tune, X Advertisers Pulling Out

X.AI’s team includes individuals with backgrounds in DeepMind, OpenAI, Google Research, Microsoft Research, Twitter, and Tesla, having contributed to projects such as DeepMind’s AlphaCode and OpenAI’s GPT-3.5 and GPT-4 chatbots, according to their LinkedIn profiles.

Musk incorporated X.AI in Nevada in March, and during the financing phase, the initial sale coincided with Musk’s appearance at the 2023 DealBook Summit. Notably, Musk addressed advertisers who had suspended campaigns on X, stating, “go f*** yourself,” in response to dozens of advertisers pausing spending on X following Musk’s controversial posts amplifying antisemitic comments.

And of course, despite the filing with the SEC that indicates the company has raised funds, Musk has responded by stating that xAI is not raising money right now.

Information for this story was found via CNBC and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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