Why xAI's $6bn Win Could Make Musk's Grok a GenAI Contender

Elon Musk's AI startup xAI has successfully closed a staggering US$6bn in a Series B funding round. 

The investment, backed by prominent investors such as Andreessen Horowitz, Sequoia Capital, and Saudi Prince Alwaleed Bin Talal, saw the startup elevating its pre-money valuation from US$18bn to US$24bn post-money valuation, according to Musk.

The funds will reportedly be utilised to bring xAI's first products to market, build advanced infrastructure, and accelerate research and development of future technologies, with the statement concluding that xAI is hiring for numerous roles.

Before the funding announcement, Musk had told investors he would like to have the supercomputer running by Autumn 2025 for xAI. 

Tech magnate Musk has long been an open and esteemed advocate of AI. His EV endeavour Tesla has long hosted its “AI Day” - where they have unveiled a series of new AI-powered concepts, like a robot called Tesla Bot - and the company's cars rely on AI system Autopilot to navigate autonomously.

Equally, the X owner was a co-founder of OpenAI, the trailblazers who popularised the concept of GenAI to the general public. 

Although the round was significantly less secured by OpenAI's US$10bn investment from by Microsoft alone, with this new endeavour, Musk seeks to position his startup xAI, which developed its flagship product chatbot Grok, as a challenger to his former allied company, 

History xAI

xAI was founded in 2023 by Musk, and was ostensibly established with the goal of developing AI tools that are both beneficial and safe for humanity. 

It was born out of Musk's departure from OpenAI in 2018, which he said he left due to potential conflicts of interest with Tesla's AI development.  

Within the same year of its inception, xAI made rapid strides in AI development. Initially intended to be called "TruthGPT", the startup’s first AI chatbot launched in November 2023 as Grok.

In December last year, Musk sought US$1bn in investment to stay ahead of the curve and compete with industry giants.

In March of 2024, the startup announced the introduction of Grok-1.5,which is capable of long context understanding and advanced reasoning. 

Rollout, however, has been staggered. By 4th May 2024, Grok had become available in the UK,, the only country in Europe to support Grok at due to the impending Artificial Intelligence Act rules in the EU. 

Grok was later reviewed by the EU and was released on May 16, 2024 to premium users, and aims to implement more widespread usage following the EU elections.

The chatbot can currently only be used to users on xAI early access program, and only people who are in the X Premium+ program can join.

xAI's edge 

xAI's Grok is an AI chatbot, similar to the likes of OpenAI’s or Anthropics in its ability to fetch information from a prompt, with a thematic exceptions - it's designed to be “witty and rebellious”.

On the data side, Musk was uniquely positioned to feed the LLM the huge data it required, as he is also the owner of X, one of the largest social media platforms on the planet. 

Therefore, Grok is trained on real-time data from X. This in theory allows Grok to be more knowledgeable about current events compared to other chatbots with fixed datasets. The company has also released improved versions of Grok, such as Grok-1.5 with long context capability and Grok-1.5V with image understanding.

This feeds into one of xAI’s stated aims is to differentiate itself from competitors like OpenAI by focusing on "truth-seeking" AI that uses real-time data. This approach is intended to address concerns about bias and misinformation that can arise from datasets that have a cut-off point, like ChatGPT. 

Despite these innovations, xAI acknowledges that Grok-1 still lags behind OpenAI's more powerful GPT-4 model in some benchmarks. Yet, Musk’s push for xAI's integration with the X platform provides, the US$6bn raised, plus the push for making Grok open source could see it outpace its competitors. 

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