Elon Musk has vehemently refuted claims made in a report suggesting that his artificial intelligence (AI) firm, xAI, has already secured $500 million out of a targeted $1 billion investment from various stakeholders.
Musk took to X (formerly known as Twitter) to dismiss the accuracy of a Bloomberg article, firmly stating, “This is not accurate.”
Bloomberg, relying on undisclosed sources, reported that xAI is presently engaged in discussions that could potentially lead to a valuation between $15 billion and $20 billion, subject to potential adjustments in the coming weeks.
In the midst of these developments, Musk and prospective investors are said to be actively negotiating terms that may extend beyond the conventional equity shares in xAI, possibly including considerations related to computing power.
Notably, in November 2023, Elon Musk disclosed that equity investors in X, the entity he founded as an alternative to OpenAI due to philosophical disagreements, would be entitled to a 25% ownership stake in xAI.
This arrangement implies that these investors are encouraged to allocate at least 25% of their X investment into xAI, according to reports.
For instance, if an investor committed $10 billion to X, they would be encouraged to invest $2.5 billion or more in xAI, according to Bloomberg’s analysis.
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xAI, founded by Musk in 2023, was introduced as a departure from OpenAI, and its chatbot, Grok, relies on social media content originating from X.
Adding to the intrigue, it was revealed that xAI had successfully secured a deal for a private sale totaling $865.3 million in unregistered equity securities.
This development came to light through a filing submitted to the United States Securities and Exchange Commission on December 5, 2023.
The filing, known as xAI Form D, stipulated that these securities would be offered exclusively to accredited investors, subject to resale restrictions under Rule 506(b).
Remarkably, $134.7 million worth of these securities had already been sold, with the initial sale taking place on November 29, 2023.
As the negotiations and discussions surrounding xAI’s financial future continue to unfold, it remains to be seen how Elon Musk’s vision for the company will align with the investment interests of prospective stakeholders.
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