Elon Musk is said to be in negotiations for a $6 billion investment in his new startup xAI.Corp., which is valued at $18 billion. Initially, xAI targeted to earn $3 billion with a pre-money value of $15 billion. Having said that, the deal terms were revised due to the investors’ immense interest, and they got a hike in the valuation.
“We all received an email that basically said, ‘It’s now $6B on $18B, and don’t complain because a lot of other people want in,” an anonymous source told TechCrunch.
Sequoia Capital and Future Ventures, which was co-founded by Elon Musk’s long-time friend, Steve Jurveton fall into the same class of investors for the round of fundraising. Traditionally, a devoted Jurvetson has been associated with Tesla where he was its Director until 2020 and a SpaceX board member.
In its pitch to investors, xAI said it aims to “connect the digital and physical worlds,” according to TechCrunch. Founded in 2023, xAI launched its AI bot Grok in November to use “AI tools that maximally benefit all of humanity.” Grok is available for use on the X platform.
Investments in xAI are channeled through a special purpose vehicle (SPV). For investments exceeding $10 million, there’s an upfront fee of 5% and a 1% management fee, alongside carried interest fixed at 10%. Smaller investments will be subject to a 2% management fee and carry interest of 20%, although these figures and charges might fluctuate.
For Business Insider, xAI went out to potential investors using email says that most of the limited partnerships (LPs) have been eagerly waiting for this deal since December 2023.
In its email, xAI pointed to its grain of shares that have been secured in its forthcoming equity round, and this fact is worth mentioning a year before its official funding round. Elon Musk made an even earlier allocation exclusive
Differently, xAI, the AI company that Microsoft Corp. supports, has an $80 billion valuation, which is a remarkable sum of money compared to its competitors. Elon Musk, who served as both a founder and an investor in the creation of OpenAI, has started legal action against them, backing up the charge that they underperformed as a nonprofit company that was supposed to stick to its original agreement.
