Musk’s xAI seeks $4.3B in new equity funding – report

Elon Musk’s generative artificial intelligence startup xAI is seeking to raise an additional $4.3B through an equity offering, on top of the $5B in debt financing it has been pursuing, according to materials shared with potential investors, Bloomberg reported.

The fundraising push comes as xAI, creator of the chatbot Grok, has reportedly exhausted much of the capital it previously secured, the documents indicate. The investors requested anonymity due to the private nature of the information.

xAI did not immediately respond to a request for comment from Seeking Alpha.

Earlier this month, Bloomberg reported that Musk is raising $5B in debt for xAI, marking the latest in a string of fundraising moves across his business empire as he shifts focus from politics back to managing his companies. It was also reported that xAI would hold a $300M share sale for new investors.

Musk wanted to put a “proper value” on xAI, according to media reports in April. xAI raised $6B in new funding late last year that valued the company at $50B. Some of that funding went towards xAI’s massive data center in Memphis, where it used 100,000 of Nvidia’s (NVDA) H100 GPUs.

In March, xAI acquired Musk’s social network X in an all-stock deal. The move propelled xAI to a $113B valuation.

Musk, who also leads SpaceX (SPACE) and Tesla (NASDAQ:TSLA), said in July 2024 he would bring the idea of Tesla investing $5B into xAI to the electric vehicle maker’s board of directors after the idea received nearly two-thirds of “yes” votes in an online poll.

The startup is expected to generate $13B in annual earnings by 2029, Bloomberg reported, citing documents by its banker, Morgan Stanley.