Elon Musk’s AI start-up seeks to raise $6bn from investors to challenge OpenAI

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Elon Musk’s xAI is in talks to raise up to $6bn, as the Tesla and X chief looks to global investors, including in Hong Kong, to finance his challenge to Microsoft-backed OpenAI.

The billionaire’s artificial intelligence start-up has courted wealthy individuals and investors around the world in recent weeks, according to multiple people familiar with the matter.

According to four people, these talks have included family offices in Hong Kong, the territory that is increasingly controlled by Beijing.

Three people with knowledge of the talks said Musk hoped to raise as much as $6bn in fresh equity capital for xAI at a proposed valuation of $20bn. However, the people cautioned that negotiations were ongoing and that the Tesla chief was still testing investor appetite for such large sums.

One person said he had also targeted sovereign wealth funds in the Middle East, while others said investors in Japan and South Korea had been approached.

Musk did not respond to emails seeking comment. He has denied numerous recent reports about xAI fundraising, despite regulatory filings that show it is raising capital. After publication, Musk posted on X: “xAI is not raising capital and I have had no conversations with anyone in this regard.”

Raising money in Hong Kong for a US artificial intelligence firm could become a politically fraught process as geopolitical tensions rise.

Washington has sought to impose export controls designed to hamper China’s development of advanced technologies. The Biden administration last year banned some US investment in Chinese AI, including in Hong Kong.

Musk’s xAI launched its first product in December, a chatbot named Grok, which is being trained using social media posts on X, allowing it to give more up-to-date answers than its competitors.

Morgan Stanley — which in 2022 helped finance Musk’s leveraged buyout of…