Great—More Money for Musk

Elon Musk is raising $6 billion for xAI, maker of Musk’s “anti-woke” artificial intelligence chatbot Grok, in a deal set to close Friday, according to our sources. The startup’s first outside funding values xAI at $18 billion, remarkable for a year-old company. It’s a reminder of what’s wrong with venture capital. 

The massive round has come together seamlessly despite Musk’s ill-fated $44 billion takeover of X, formerly known as Twitter, in 2022. As a reminder, the number of monthly active users on X has sunk under Musk and ad revenue has plummeted. That’s because Musk has managed the firm by telling advertisers, who paused spending last year after he’d endorsed an antisemitic tweet, to “Go f— yourself!” These antics have made X worth less than half what he paid less than two years ago. 

But in Silicon Valley, it’s impossible to stop the stampede of venture capitalists toward a supposed genius. And X aside, Musk’s track record in tech is extraordinary. Investors backing xAI hope that they’re getting a piece of the next SpaceX, or that by funding Musk’s latest project, they’ll get a larger piece of SpaceX itself. They don’t feel that they can say no to funding xAI, or risk losing a seat at the table for Musk’s next winning venture.