Nov 28, 2024 05:29 PM IST
Musk founded xAI last year to take on OpenAI and Anthropic. With a new $5 billion fundraise round, its valuation will double $50 billion in just six months
The investors who backed Elon Musk’s takeover of social media platform X (Formerly Twitter) will see huge gains after a surge in the valuation of xAI, its artificial intelligence (AI) company.
This is because Musk gave 25% of of xAI’s shares to those same investors who backed his $44 billion acquisition of Twitter.
Musk had founded xAI just last year to take on OpenAI and Anthropic. Now a new $5 billion fundraising round may come soon, doubling its valuation to $50 billion in just six months.
This means that the same investors can be more than compensated for the huge valuation plunge X has seen after advertisers abandoned it over content moderation concerns. Fidelity for example had written down its investment by nearly 80%, giving it a current value of $9.4 billion.
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These investors include Fidelity, Oracle co-founder Larry Ellison, Saudi Arabia’s Prince Alwaleed bin Talal, Twitter founder Jack Dorsey and Silicon Valley venture firms Sequoia Capital and Andreessen Horowitz, according to the report.
This can also be a boon for banks like Morgan Stanley and Barclays which are sitting on about $13 billion of Twitter debt, according to the report which added that Musk had taken about $7.1 billion from investors to fund the takeover while the rest was with bank loans and his fortune, including by selling Tesla shares.
Only investors who had backed xAI in the previous fundraise were permitted to invest in the current round, according to the report which added that Andreessen Horowitz, Sequoia Capital, Prince Alwaleed and Fidelity were some of them.
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