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Sequoia Capital, Silicon Valley’s best-known venture capital firm, has committed to investing in Elon Musk’s artificial intelligence startup xAI, bolstering the Tesla boss’s efforts to raise billions and take on the likes of OpenAI, Meta and Google.
Musk has been trying for months to raise up to $6 billion from investors worldwide for xAI, which he launched in 2023 with a mission to “understand the true nature of the universe.”
The serial entrepreneur has reached out to investors about his acquisition of the social media platform Twitter in 2022, which he is in the know.
Sequoia, which invested $800 million in Twitter, will also invest in xAI, according to the people. It is unclear how much the investment will be.
The Silicon Valley company, an early investor in Google, YouTube and Apple, has backed several Musk projects in recent years, including his tunneling company The Boring Company and commercial space company SpaceX. Roelof Botha, the head of Sequoia, was hired by Musk at PayPal in 2000.
Sequoia declined to comment.
Sequoia’s backing, first reported by The Information, will give Musk a boost as he tries to catch up with rival AI startups like ChatGPT developer OpenAI and Anthropic, as well as big tech companies like Meta and Google. who have developed the most powerful leading large language models that underlie new AI tools.
Building and operating LLMs is a costly affair. Huge amounts of computing power and expensive hardware are required to train and run the models that power chatbots, which can generate lines of text, code and images in seconds.
OpenAI has raised $13 billion from its biggest backer, Microsoft, while Anthropic has received commitments of $2 billion and $4 billion from Google and Amazon, respectively.
Musk has steadily accumulated the powerful chips needed to train AI models and has hired engineers and researchers, some from Tesla, to support xAI. The capital investment would help accelerate this project and bring xAI’s chatbot, Grok, closer to the performance of its competitors.
Musk founded OpenAI in 2015 with the company’s CEO Sam Altman and others. He left OpenAI’s board in 2018 after disagreements with Altman over the direction of research.
Last month, Musk sued OpenAI and Altman, saying they had compromised the startup’s original mission to develop AI systems for the benefit of humanity. OpenAI has described the case as “frivolous.”