Elon Musk’s artificial intelligence startup, xAI, could get a major boost as it races to catch rivals like OpenAI and Anthropic in the highly competitive space.
Investors close to the Tesla and SpaceX CEO are in talks to help xAI raise $3 billion in a funding round that could value it at $18 billion, sources told the Wall Street Journal, which said Steve Jurvetson and venture capital firm Gigafund are among the prospective backers.
Jurvetson is a friend of Musk’s who serves on SpaceX’s board and previously sat on Tesla’s board. Meanwhile, Gigafund cofounder Luke Nosek is also on SpaceX’s board and is part of the so-called PayPal mafia, along with Musk, according to the Journal.
Representatives for xAI didn’t immediately respond to Coins2Day’s request for comment on Saturday and didn‘t respond to the Journal’s request late Friday.
Musk launched xAI last year as a rival to ChatGPT parent OpenAI, which he cofounded but later sued after claiming it was abandoning its original nonprofit mission. In November, xAI launched its own chatbot named Grok and released an updated version last month.
News of the possible $3 billion fundraising round is the latest sign that xAI is looking for more capital while rival OpenAI has a $13 billion commitment from Microsoft and Anthropic has raised $6 billion, including from backers Google and Amazon.
In January, the Financial Times reported that Musk was looking to raise up to $6 billion for xAI, though he later denied that he was fundraising. And in December, a regulatory filing showed that xAI was seeking to raise $1 billion from investors and had already secured nearly $135 million.
At the same time that the race for investor backing is heating up in artificial intelligence, xAI and its rivals are also competing for AI talent. After news emerged on Wednesday that Tesla’s Ethan Knight became the carmaker’s fourth engineer to join xAI, Musk tweeted that Knight had planned to defect to OpenAI.
“It was either xAI or them,” Musk wrote, noting he was also boosting the AI engineers’ pay. “[OpenAI has] been aggressively recruiting Tesla engineers with massive compensation offers and [has] unfortunately been successful in a few cases.”
He later added: “The talent war for AI is the craziest talent war I’ve ever seen!”
Tech companies are scrambling to fight for the limited pool of workers with high-level AI experience. In fact, there might be only a couple hundred people in the world with high-level qualifications in training large language models and troubleshooting new AI platforms, Naveen Rao, head of generative AI at Databricks, told the Wall Street Journal last month.
The cost to attract and retain such in-demand skills is high. Data from career-services platform Levels.fyi shows the median salary at OpenAI is $925,000, including bonuses and company equity.
Such sky-high compensation comes as a March report from McKinsey found that about 51% of gen AI creators and heavy users say they are planning to quit within the next three to six months, compared with 34% of workers overall who say they plan to leave within that same time period.
At Facebook parent Meta, at least three high-level AI employees have departed in the past few weeks. That includes computer scientist and senior director of engineering Erik Meijer, who told Coins2Day in an exclusive interview that he had declined “stellar offers” from several of the “most sought-out” AI companies.
To keep such brainpower from jumping ship, CEO Mark Zuckerberg has even reportedly taken to wooing top AI engineers and researchers with personal appeals.
