Elon Musk's xAI Seeks $9.3 Billion in Funding Amid Rapid Cash Burn

Elon Musk's xAI is reportedly seeking a $4.3B equity raise | TechCrunch

Elon Musk's startup xAI is trying to raise a $4.3 billion equity investment, according to a report from Bloomberg. This equity funding would be in addition to the $5 billion that Musk is allegedly trying to raise in debt funding for the combined entity of X and xAI. The company appears to be raising money again after landing a $6 billion cash infusion in December, because it has already spent much of its money. xAI makes Grok, the AI chatbot that's embedded inside the social network X, as well as the image generator Aurora. The technology that powers these products is notoriously resource-intensive, which could be contributing to the rate at which the company is spending money.

Musk's xAI in Talks to Raise $4.3 Billion in Equity Funding

Elon Musk's artificial intelligence startup xAI is in talks to raise $4.3 billion through an equity investment on top of the $5 billion it has recently been trying to borrow from debt investors, according to information the company shared with investors who asked not to be identified because it is private. Musk's company, which is responsible for the AI chatbot Grok, needs the new money, in part, because it has already spent most of what it previously raised, the materials shared with investors indicate.

Musk's xAI Burning Through $1 Billion a Month as Costs Pile Up

Elon Musk's artificial intelligence startup xAI is trying to raise $9.3 billion in debt and equity, but even before the money is in the bank the company has plans to spend more than half of it in just the next three months, according to deal terms shared with investors. The rate at which the company is raising funds and tearing through cash offers a stark illustration of the unprecedented financial demands of the artificial intelligence industry, and the relatively meager revenues it is bringing in so far, at least when it comes to xAI.

Musk's xAI in talks for $4.3 billion equity funding, Bloomberg News reports

June 17 (Reuters) - Elon Musk's AI startup xAI is in talks to raise $4.3 billion through an equity investment on top of its $5 billion debt funding plans, Bloomberg News reported on Tuesday, citing information shared with investors. Between its founding in 2023 and when the debt sale was launched this year, xAI raised $14 billion through equity fundraising, the report said. The Grok chatbot maker needs new funding, partly because it has already spent most of what it previously raised, according to the report. XAI did not immediately respond to Reuters' request for comment. Reporting by Jaspreet Singh in Bengaluru; Editing by Leroy Leo Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Elon Musk's xAI nears $9.3bn equity and debt deal

Elon Musk's artificial intelligence company xAI is nearing a $9.3bn debt and equity deal, as investors looked past the billionaire's spat with President Donald Trump that had complicated the capital raising efforts. Investors have placed orders of more than $5bn in a bond and loan offering, giving the company's bankers at Morgan Stanley confidence that they can finalise the financing round, according to people briefed on the matter. xAI has told investors it also expects to complete a $4.3bn equity raise alongside the new debt package, giving it added firepower to build data centres as it looks to compete with rivals including OpenAI. The company, founded in 2023, is competing with OpenAI, Anthropic, Google and others to develop and commercialise increasingly sophisticated AI tools. Musk's company launched its own chatbot, Grok, as an irreverent alternative to ChatGPT and Google's Gemini, claiming it would seek the truth rather than a politically correct narrative. Musk combined xAI with his social media company X in March, in a deal that valued the combined entity at $113bn. The group recently launched a secondary offering, in which staff can sell their shares to investors, which would serve to validate the pricetag set by Musk in March. The new fundraising was caught in the crossfire between Musk and Trump earlier this month when the two men lashed out at each other on social media. Musk has since said he regrets some of his posts about Trump. The close ties between the two men, with Musk referring to himself as the president's "first buddy", had been seen as a boon to investors who were doing due diligence on xAI. Musk had touted his close relationship with the White House in his pitch to investors, claiming the links could help him edge out rivals including OpenAI and Anthropic, according to two people familiar with the matter. The unravelling of Musk's relationship with Trump, in turn, raised new questions for investors and damped the enthusiasm of some, with several telling the Financial Times they decided against participating in the deal. Nonetheless, several big money managers saw value in the $5bn debt package, with the bonds expected to be priced with a yield of about 12 per cent. The financing is expected to be split between fixed- and floating-rate loans and a bond. Investment group TPG Angelo Gordon agreed to anchor the deal, committing to invest $1bn in the debt, one person noted. Commitments are due on Tuesday and it is expected to price later this week. xAI did not respond to a request for comment. Morgan Stanley and TPG declined to comment. The borrowing package and equity raise will give the firm the capital it needs to construct new data centres as it looks to compete with rivals. xAI and its competitors are burning through money as they look to equip data centres with chips that power their large language models. xAI told investors that it lost $341mn before interest, taxes, depreciation and amortisation in the first quarter, according to a person familiar with the matter. But the company set lofty projections for its future, forecasting ebitda of more than $13bn in 2029. OpenAI, by comparison, has forecast revenues of $125bn in 2029, though the company still expects to be lossmaking until then.

Musk's xAI on track to raise $5 billion in fresh debt, following modest demand

Elon Musk announced his new company xAI which he says has the goal to understand the true nature of the universe. Elon Musk's xAI is on track to close on a $5 billion debt raise led by Morgan Stanley, despite tepid investor demand, according to two people familiar with the matter. The $5 billion debt sale, which includes a floating-rate term loan, a fixed-rate loan and secured bonds, will be allocated to investors on Wednesday, the two people said, asking not to be identified because the deal is private. xAI did not immediately respond to a request for comment while Morgan Stanley declined. The xAI offering, which was reported on June 2 as Musk and U.S. President Donald Trump traded barbs over social media, did not receive overwhelming interest from high-yield and leveraged loan investors, said five people briefed on the deal. The floating-rate loan will be offered with an interest rate of 700 basis points over the Secured Overnight Financing Rate, a benchmark rate used to price bond deals, while the fixed-rate loan and secured notes will pay a yield of roughly 12%, the two people said. The average yield-to-maturity on high-yield bonds closed Monday at 7.6%, according to the ICE BofA High Yield Index .MERH0A0. Musk's AI company has to pay significantly more since xAI and its debt are not yet rated, giving investors little visibility into the company's finances and higher risk. Three bond investors who were offered the debt told Reuters they declined to invest. One of these investors noted that xAI has not yet turned a profit and the debt is not rated. They were especially reticent given Musk's track record when he financed his $44 billion acquisition of social media giant X, known at the time as Twitter, in 2022. The banks that loaned him $13 billion to close the deal were forced to hold that debt on their balance sheets for two years because they could not offload it. While the debt sold in full and on time, it received modest demand from investors, all five people said. Investors submitted orders for roughly 1.5 times the amount of debt available, according to the first two people briefed on the deal. Most similar junk bond deals have typically attracted orders for 2.5 to 3 times the loans and bonds being offered, the people said. Unlike Musk's debt deal when he acquired Twitter, Morgan Stanley did not guarantee how much it would sell or commit its own capital to the deal, in what is called a "best efforts" transaction, according to one person familiar with the terms. In the Twitter acquisition, the banks ended up making money on the debt, selling it with little-to-no discount months after Trump won the White House and Musk's influence in Washington grew. Apart from selling debt, xAI has also been in talks to raise about $20 billion in equity, valuing the company at more than $120 billion, with some investors placing valuations as high as $200 billion, Reuters reported last week.

Elon Musk's xAI Seeks $4.3 Billion in Fresh Funding: Bloomberg - Decrypt

Musk's xAI recently acquired the social platform X and has reportedly spent most of its prior $14 billion haul. Elon Musk's artificial intelligence startup, xAI, is seeking $4.3 billion in new equity financing, Bloomberg reports, signaling an aggressive expansion push for the company. The latest funding comes in addition to a separate $5 billion debt financing plan announced earlier this month. The fundraises underscore Musk's renewed focus on building out his AI ventures after leaving the Trump administration and the Department of Government Efficiency (aka DOGE) in May. Last year, xAI raised $6 billion in a Series B round in May and another $6 billion in a Series C round in December, which included investments from Andreessen Horowitz, Sequoia Capital, Fidelity, BlackRock, the Qatar Investment Authority, and Kingdom Holding Company. Following the Series C funding round, xAI was valued at $50 billion. In March, xAI acquired X (formerly Twitter), Musk's social media platform, through an all-stock transaction, granting xAI access to a massive real-time data stream for training its AI systems. At the time of the acquisition, the combined value of xAI and X stood at $113 billion. The company has also invested heavily in hardware, building a supercomputer nicknamed Colossus, which is expected to use more than 200,000 GPUs. "This isn't a hype cycle. It's a capital regime shift -- one where AI isn't the bubble; it is the system," Shay Boloor, chief market strategist at the Futurum Group, told Decrypt. "Musk just showed us the going rate to play: $9.3 billion and counting." While the specifics of the investor composition remain undisclosed, the combined $9.3 billion financing package, comprising both debt and equity, will finance xAI's expansion into larger data centers and the continued deployment of its flagship chatbot, Grok. According to investor briefings cited by Bloomberg, xAI has already spent the majority of the $14 billion it raised prior to this latest fundraising effort. "This is infrastructure capital -- poured into GPUs, training runs, and the bandwidth layer that turns AI hype into functionality," Boloor added. "Musk isn't building an app; he's buying the base layer. And he's betting that whoever controls computing power controls the future."

Musk's xAI seeks to raise $6.6b in further PE funding

Gift 5 articles to anyone you choose each month when you subscribe. Elon Musk's artificial intelligence startup xAI is in talks to raise $US4.3 billion ($6.6 billion) through an equity investment on top of the $US5 billion it has recently been trying to borrow from debt investors, according to information the company shared with investors who asked not to be identified because it is private. Musk's company, which is responsible for the AI chatbot Grok, needs the new money, in part, because it has already spent most of what it previously raised, the materials shared with investors indicate.

Musk's xAI in talks for $4 billion equity funding: Report

Elon Musk's xAI is seeking $4.3 billion in equity funding, alongside a $5 billion debt sale, amid rising AI development costs. Having raised $14 billion earlier, xAI has reportedly spent most of it. The Grok chatbot maker is now valued at $80 billion, per Bloomberg.Elon Musk's artificial intelligence startup xAI is in talks to raise $4.3 billion through an equity investment on top of its $5 billion debt funding plans, Bloomberg News reported on Tuesday, citing information shared with investors. Between its founding in 2023 and when the debt sale was launched this year, xAI raised $14 billion through equity fundraising, the report said. Training and deploying advanced AI systems are exceedingly expensive, driven by costly hardware, intensive compute and the need for skilled employees in a fiercely competitive market. The Grok chatbot maker needs new funding, partly because it has already spent most of what it previously raised, according to the report. Morgan Stanley, the bank in charge of the debt sale, declined to comment, while xAI did not immediately respond to Reuters' requests for comment. Commitments for the $5 billion debt sale are due Tuesday, the report said, citing a person with knowledge of the matter. Additionally, xAI may also get a $650 million rebate from one of its manufacturers that will help the firm cut costs, according to the report. XAI, which acquired X earlier this year, is said to have a valuation of $80 billion at the end of the first quarter, up from $51 billion at the end of 2024, the report said. Rival OpenAI had said in March it would raise up to $40 billion at a $300 billion valuation in a new funding round led by SoftBank Group. Musk cofounded OpenAI in 2015, but stepped down from the company's board in 2018.

Elon Musk's xAI Expects to Spend $13 Billion in 2025 | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. The company shared this data with investors while working to raise $9.3 billion in debt and equity, Bloomberg reported Tuesday (June 17), citing unnamed sources. XAI did not immediately reply to PYMNTS' request for comment. The rate at which the company is raising money and spending it is common across the AI industry, due to the financial demands of the technology, which requires server farms and specialized chips, according to the report. XAI has been keeping pace with these demands by raising funds, the report said. It also has the support of Musk, the world's richest man, who has a history of investing in companies long before they start making money. The company also has the potential advantages of access to chips through Musk's social media company, X, which stockpiled them, and the possibility of training its AI models on X's archives now that the two companies have merged, per the report. XAI has projected that it will be profitable by 2027, and it told potential investors that its valuation rose from $51 billion at the end of 2024 to $80 billion at the end of the first quarter, according to the report. It was reported in May that xAI's generative AI tool, Grok, saw fast growth starting in late February, thanks to the release of Grok 3, and had around 8 million daily average visits. On May 6, xAI and Palantir announced that they had teamed up to explore how financial services firms can employ AI. The partnership's current offerings include an "agentic workforce" that the companies described as "modular AI agents tailored to specific business processes," with a "deep focus on orchestration across and between functions" to deliver things like revenue generation and cost reduction. When xAI acquired X in March, Musk said the companies' futures are intertwined. "Today, we officially take the step to combine the data, models, compute, distribution and talent," Musk said. "This combination will unlock immense potential by blending xAI's advanced AI capability and expertise with X's massive reach."

Elon Musk's xAI aims to raise $4.3B in equity funding: report

Elon Musk's artificial intelligence firm xAI is reportedly in talks to raise $4.3 billion in a new equity investment round. The company behind snarky AI chatbot Grok has told investors that it needs the money in part because it has burned through cash it had previously raised, Bloomberg reported, citing materials it had obtained that were shared with potential investors. xAI is pursuing the equity investment in addition to its plans to borrow $5 billion from debt investors, the report added. Morgan Stanley is leading the debt sale, with commitments from participants due by Tuesday. The debt sale reportedly hit a snag after Musk's very public war of words with President Trump. However, xAI has made concessions to entice investors that may have been spooked by the feud between the former DOGE cost-cutter and Trump -- such as placing a limit on the amount of secured debt it can raise, according to Bloomberg. While Musk recently moved to merge xAI with his social media platform X, formerly known as Twitter, the new funds will go toward AI operations, the report said. Representatives for xAI did not immediately return The Post's request for comment. The AI startup had raised $14 billion in equity fundraising since its launch in 2023, according to Bloomberg. However, xAI was said to be down to $4 billion as of March 31. The company raised $6 billion from investors as recently as December. The mogul's company is locked in intense competition with well-funded rivals like Sam Altman's OpenAI, Mark Zuckerberg's Meta and Sundar Pichai's Google to win the race to develop advanced AI. All of the firms have poured tens of billions of dollars into efforts to build out the AI data centers and other infrastructure required to train and power the large-language models that underpin their AI products. XAI has told investors that it has an $80 billion valuation as of the first quarter of this year - up from $51 billion at the end of last year.

Musk's xAI in talks for $4.3 billion equity funding, Bloomberg News reports

(Reuters) -Elon Musk's AI startup xAI is in talks to raise $4.3 billion through an equity investment on top of its $5 billion debt funding plans, Bloomberg News reported on Tuesday, citing information shared with investors. Between its founding in 2023 and when the debt sale was launched this year, xAI raised $14 billion through equity fundraising, the report said. The Grok chatbot maker needs new funding, partly because it has already spent most of what it previously raised, according to the report. XAI did not immediately respond to Reuters' request for comment. (Reporting by Jaspreet Singh in Bengaluru; Editing by Leroy Leo)

Exclusive-Musk's xAI on track to raise $5 billion in fresh debt, following modest demand

NEW YORK (Reuters) -Elon Musk's xAI is on track to close on a $5 billion debt raise led by Morgan Stanley, despite tepid investor demand, according to two people familiar with the matter. The $5 billion debt sale, which includes a floating-rate term loan, a fixed-rate loan and secured bonds, will be allocated to investors on Wednesday, the two people said, asking not to be identified because the deal is private. xAI did not immediately respond to a request for comment while Morgan Stanley declined. The xAI offering, which was reported on June 2 as Musk and U.S. President Donald Trump traded barbs over social media, did not receive overwhelming interest from high-yield and leveraged loan investors, said five people briefed on the deal. The floating-rate loan will be offered with an interest rate of 700 basis points over the Secured Overnight Financing Rate, a benchmark rate used to price bond deals, while the fixed-rate loan and secured notes will pay a yield of roughly 12%, the two people said. The average yield-to-maturity on high-yield bonds closed Monday at 7.6%, according to the ICE BofA High Yield Index. Musk's AI company has to pay significantly more since xAI and its debt are not yet rated, giving investors little visibility into the company's finances and higher risk. Three bond investors who were offered the debt told Reuters they declined to invest. One of these investors noted that xAI has not yet turned a profit and the debt is not rated. They were especially reticent given Musk's track record when he financed his $44 billion acquisition of social media giant X, known at the time as Twitter, in 2022. The banks that loaned him $13 billion to close the deal were forced to hold that debt on their balance sheets for two years because they could not offload it. While the debt sold in full and on time, it received modest demand from investors, all five people said. Investors submitted orders for roughly 1.5 times the amount of debt available, according to the first two people briefed on the deal. Most similar junk bond deals have typically attracted orders for 2.5 to 3 times the loans and bonds being offered, the people said. Unlike Musk's debt deal when he acquired Twitter, Morgan Stanley did not guarantee how much it would sell or commit its own capital to the deal, in what is called a "best efforts" transaction, according to one person familiar with the terms. In the Twitter acquisition, the banks ended up making money on the debt, selling it with little-to-no discount months after Trump won the White House and Musk's influence in Washington grew. Apart from selling debt, xAI has also been in talks to raise about $20 billion in equity, valuing the company at more than $120 billion, with some investors placing valuations as high as $200 billion, Reuters reported last week. (Reporting by Matt Tracy, Echo Wang and Davide Barbuscia; Additional reporting by Tatiana Bautzer; Editing by Chizu Nomiyama and Stephen Coates)