Musk-owned xAI is looking to raise $5 billion, while Neuralink, also owned by him, has raised $650 million, according to reports. The former is vying to expand its footprint in the competitive artificial intelligence space, which is dominated by the likes of Microsoft, OpenAI and Google. The latter has started clinical trials for its brain implant devices.
xAI to raise $5 billion
Musk’s AI startup xAI Corp is looking to sell debt worth $5 billion. Morgan Stanley, the bank that advised him on his $44-billion Twitter acquisition, is shopping the debt at a double-digit interest rate, news agency Bloomberg reported.
The debt package includes a floating-rate term loan, a fixed-rate term loan, and senior secured notes. The funds will be used for general corporate purposes, with commitments due by June 17.
Early pricing discussions suggest a rate 7 percentage points above the benchmark for the floating-rate loan and around a 12% yield on the senior notes. The debt package has already seen strong investor demand, exceeding $3.5 billion.
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The debt is linked to XAI Holdings, which includes both xAI and Musk’s social media platform X, which were merged in March via an all-stock deal valued at $33 billion. In April, Bloomberg reported that XAI Holdings was in talks to raise around $20 billion from investors.Musk is also selling $300 million in xAI stock through a secondary offering, eyeing a valuation of $113 billion, the Financial Times reported.
Musk has been investing heavily in AI infrastructure, including xAI’s Colossus supercomputer and a data centre in Memphis. The funds raised in the latest rounds could be used to finance these facilities.
Neuralink secures fresh cash
On Monday, Neuralink, which makes brain implant chips to process and transmit neural signals, raised $650 million in a fresh funding round. ARK Invest, DFJ Growth, Founders Fund, G42, Human Capital, Lightspeed, QIA, Sequoia Capital, Thrive Capital, Valor Equity Partners and Vy Capital participated in the round.
Last month, a Semafor report said that the company had raised $600 million at a valuation of $9 billion. The company had previously raised $280 million in a funding round led by Peter Thiel’s Founders Fund.
Neuralink’s brain chip is meant to help people with disabilities carry out day-to-day tasks by transmitting neural signals to computers and smartphones. In early tests, the implant has allowed the first patient to play video games, browse the internet, post on social media and move a cursor on his laptop directly with his brain.
The company claims that five patients with severe paralysis are using Neuralink to control digital and physical devices with their thoughts. The company received a ‘breakthrough’ tag for its speech restoration device last month and vision-restoring device last year from the US Food and Drug Administration.
XChat goes live
Moving forward with his plans to make X, formerly Twitter, into an ‘everything app’, Musk announced the rollout of the XChat direct message service on the platform.
The new messaging feature is built on Rust with Bitcoin-style encryption, disappearing messages, cross-platform audio and video calls, and native filesharing capabilities.
The Bitcoin-style encryption likely refers to elliptic curve cryptography (ECC), where each user has a secret private key and a public key. Messages are encrypted using the public key and can only be decrypted by the private key.
Tesla in India
Electric vehicle (EV) major Tesla is not keen on manufacturing in India, union heavy industries minister HD Kumaraswamy said on Monday. The company had recently selected showroom space in Mumbai and even posted job offers in the country.
But the electric carmaker is yet to take any concrete steps towards setting up manufacturing facilities in India.
Kumarawswamy’s remark came as India plans to invite formal applications under its new flagship EV policy, Scheme to Promote Manufacturing of Electric Passenger Cars in India.