Elon Musk's XAI Holdings is in talks to raise approximately $20 billion for its newly merged AI startup and social media business. If successful, this funding round will increase the company's valuation to over $120 billion, making it the second-largest startup funding round ever, following OpenAI's $40 billion earlier this year.
The potential funding could surpass $20 billion, but the final amount and terms are still under negotiation. The funds are expected to be raised in the coming months, potentially reshaping the competitive landscape of the tech industry. This capital injection might provide new momentum for the X platform and help alleviate its substantial debt burden.
Musk's private companies, like SpaceX, have seen valuations soar, with SpaceX reaching $350 billion in a private transaction last year. This funding round could reduce the likelihood of Musk selling Tesla stock to fund XAI Holdings, which may be favorable for Tesla shareholders.
XAI Holdings, formed from the merger of Musk's companies X (formerly Twitter) and AI startup xAI, carries significant debt. In March, X paid around $200 million in debt service costs related to Musk's acquisition of Twitter. By the end of 2024, the company's annual interest expenses are projected to exceed $1.3 billion.
