The largest Series B financing in history! Musk's xAI sets a new VC record

Author: Li Xiaoyin

Source: Hard AI

On May 26th, Musk's AI startup xAI announced the largest Series B financing in history, totaling $6 billion in May.

Established in March 2023, xAI's first financing was in January 2024, amounting to $135 million according to Pitchbook. This is the second priced equity financing round.

From the perspective of the entire venture capital market, $6 billion can be considered a huge financing deal.

The latest research report from Morgan Stanley pointed out that compared to other industries, the $6 billion financing amount exceeds the total financing in the clean technology industry this year, and even surpasses the total financing in the nuclear energy industry since 2015. In comparison within the industry, xAI's financing size this time is second only to OpenAI's $10 billion financing.

xAI stated in its blog that it will use this funding to drive the launch of its first products, build advanced infrastructure, and accelerate the development of future technologies.

According to the announcement, the main investors in this financing round include Valor Equity Partners, a US venture capital firm led by Antonio Gracias, one of the initial investors in Tesla and SpaceX, the "mysterious" investment company Vy Capital from Dubai, Silicon Valley venture capital firm Andreessen Horowitz, and venture capital firm Sequoia Capital.

Capital Expenditure Determines AI Advantage

In the past year, xAI has made significant progress in large-scale model development.

In November last year, xAI announced the open-source AI chatbot Grok-1, benchmarking ChatGPT. In March this year, xAI released the new generation AI large model Grok-1.5v, optimized in reasoning ability and context window. In less than a month, the multimodal AI model Grok-1.5v was quickly launched, with test results showing its processing level ranking among the top tier of mainstream large models abroad.

As reported by the media earlier, Musk also intends to build an AI version of a "supercomputing factory", and has publicly stated that the supercomputer developed in collaboration with xAI and Oracle may be operational before the fall of 2025, with Musk personally responsible for on-time delivery. It is expected that the connected chipsets will be at least four times the size of the largest GPU cluster today Morgan Stanley released a report on May 28 stating that capital expenditure is a decisive factor in AI advantage, and it is expected that multiple companies under Musk's leadership may cumulatively invest hundreds of billions of dollars in AI infrastructure.

Moreover, Morgan Stanley further pointed out that the success or failure of Tesla will correspondingly lower or raise the capital cost of Muskonomy. "Muskonomy," which includes enterprises such as X, Tesla, SpaceX, under Musk's leadership.

Furthermore, the report believes that Tesla's internal data and the construction of its vehicle network infrastructure are crucial for the AI efforts of other companies under Musk's leadership, firstly because the data of car users may aid in the learning and development of AI models, and secondly because the unique attributes of the vehicle network may be more critical for an AI-driven hybrid computing ecosystem.

The report also mentioned that although the current demand for GPUs and computing power in AI infrastructure is strong, in the next 3-5 years, electrical grid hardware will become the primary limiting factor for the operation of AI infrastructure, mainly including wiring, temporary power supply, transformers, and the availability of power purchase agreements (PPAs) for clean energy.