Elon Musk’s latest tweet throws a curveball, declaring that his AI venture, xAI, isn’t on a fundraising mission right now.
This revelation comes as a twist, especially after a recent SEC filing hinted at xAI gearing up for a massive $1 billion equity fundraising.
Also read: Elon Musk’s xAI Seeks $1B in Private Sale of Unregistered Securities
The SEC filing vs. Musk’s statement
According to the SEC filing revealed on Tuesday, xAI has already secured $134.7 million in equity financing from a proposed total of $1 billion. The revelation stirred significant interest in the tech and investment communities, pointing towards a major financial move by the AI venture. However, Musk’s latest tweet directly refutes this narrative. In response to a post by Gene Munster of Deepwater Asset Management, Musk clarified, “We are not raising money right now.”
We are not raising money right now
— Elon Musk (@elonmusk) December 6, 2023
Later on, Munster’s post expressed enthusiasm about investing in xAI, inquiring about participation in the funding round. He interpreted the fundraising as Musk’s ambition to rival established AI entities like OpenAI and Anthropic. In a subsequent tweet, Munster speculated on the valuation of xAI in light of Musk’s involvement.
“Elon is raising $1B for xAI. A week ago, he raised $135 million from investors. He wants to compete with OpenAI and Anthropic,” Munster stated in one of his tweets.
He suggested that the company could be valued at around $10 billion post-money under normal circumstances. Nevertheless, given that it is Musk’s company, traditional valuation frameworks might not apply, estimating a potential valuation between $25 billion and $30 billion. This would align with the valuation of Anthropic’s last funding round, positioning xAI as a formidable player in the AI industry.
Given it’s Musk’s company you throw the “normal valuation” framework out the window. My guess is this gets valued $25B-$30B, a similar valuation as Anthropic’s last round.
— Gene Munster (@munster_gene) December 5, 2023
Market implications and Musk’s influence
Notably, the news of Musk’s tweet immediately impacted the cryptocurrency market, particularly Dogecoin (DOGE). The DOGE price, which had been surging, experienced a reversal, falling to $0.10, representing a 1.1% decrease in just one hour.
Musk’s influence on DOGE has been a recurring theme, given his well-documented interest in the meme-inspired cryptocurrency. His previous endorsements and proposals, such as suggesting DOGE as a payment option for Twitter Blue, have led to notable price fluctuations.
Moreover, Musk’s electric car company, Tesla, has even embraced DOGE as a payment method for merchandise in the Tesla Store. This ongoing involvement with DOGE has further solidified his influence over the cryptocurrency market.
“Tesla will make some merchandise buyable with Doge & see how it goes.”
The rising tide of AI investments
The AI sector is witnessing a surge in investments, notably following the success of ChatGPT and OpenAI’s $10 billion fundraising from Microsoft. Musk’s xAI emerged in this context, positioned as a response to what he perceives as Big Tech’s shortcomings in AI, particularly regarding censorship and safety. Similarly, Amazon entered the fray, investing up to $4 billion in Anthropic in September.
Adding to the competitive landscape, Inflection AI, a Silicon Valley startup, raised $1.3 billion in funding in June, with Microsoft and Nvidia leading the investment. This funding underlines the intensifying race in AI development and the growing interest from major tech players in backing innovative AI ventures.
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