This AI startup, xAI, led by Elon Musk, has again hit the headlines after it raised $10 billion in a combination of debt and equity capital. The news was confirmed on Monday by Morgan Stanley, which is one of the major financial backers. In their statement, they said that xAI got a debt facility of $5 billion and another $5 billion in a strategic equity offering. This balanced source of funding ensures the lowering of the amount of capital thus consumed, as well as increased access to other forms of investment.
The funds will support the expansion plans of xAI to create one of the most substantial data centres in the world, as well as the development of the core product of the company Grok’s AI chatbot. Grok has been in the limelight with xAI in a hurry to compete with other leaders in the area of artificial intelligence, such as OpenAI, Google deep mind and anthropic.
The investment is on top of the $6 billion round xAI closed back in December. The previous round had an impressive crew of investors, such as giant names such as Andreessen Horowitz, Blackrock, Fidelity, Lightspeed, Nvidia, and AMD. Saudi Arabia even entered the game through its own Kingdom Holdings and has shown great interest in investing in the activities of Musk in AI.
The new investment has brought the current capital raised by xAI to approximately $17 billion. Such a war chest is enormous, providing the firm with a great advantage in the current race to AI. It also demonstrates how serious Musk is when it comes to the xAI becoming a leader in this rapidly growing area.
The difference in this round is that debt and equity are in combination. On the one hand, equity gives investors a piece of the company; on the other hand, with debt, xAI can raise funds without losing some control. Companies which desire to expand fast enough, still being attentive to the administration and the cost, frequently utilize this technique.
xAI has remained silent on the terms of funding. However, the point is clear: Musk is betting big on AI. xAI, with its huge funding and ambitious prospects, will emerge to play against such technological giants. You will have to wait the next several years to see whether Grok and xAI can really change the game.
