Elon Musk’s xAI is in talks to raise up to $6bn, as the Tesla and X chief looks to global investors, including in Hong Kong, to finance his challenge to Microsoft-backed OpenAI. The billionaire’s artificial intelligence start-up has courted wealthy individuals and investors around the world in recent weeks, according to multiple people familiar with the matter. According to four people, these talks have included family offices in Hong Kong, the formerly autonomous Chinese territory that is increasingly controlled by Beijing. Three people with knowledge of the talks said Musk hoped to raise as much as $6bn in fresh equity capital for xAI at a proposed valuation of $20bn. However, the people cautioned that negotiations were ongoing and that the Tesla chief was still testing investor appetite for such large sums. One person said he had also targeted sovereign wealth funds in the Middle East, while others said investors in Japan and South Korea had been approached. Raising money in Hong Kong for a US artificial intelligence firm could become a politically fraught process as geopolitical tensions rise. Washington has sought to impose export controls designed to hamper China’s development of advanced technologies. The Biden administration last year banned some US investment in Chinese AI, including in Hong Kong. Musk’s xAI launched its first product in December, a chatbot named Grok, which is being trained using social media posts on X, allowing it to give more up-to-date answers than its competitors. Morgan Stanley — which in 2022 helped finance Musk’s leveraged buyout of X, formerly Twitter — is co-ordinating the fundraising, one of the people said. The bank declined to comment. Musk did not respond to an email seeking comment. The scale of the attempted fundraising reflects the enormous costs required to develop generative AI — models that produce humanlike text, images and code in seconds — which requires huge computing power, vast amounts of data and cutting-edge chips.
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