would anyone do this?
X.ai (Elon Musk AI Company) - Series A - Investment Opportunity
We have the opportunity to invest in Elon Musk's new AI company called "X.ai" (
https://x.ai/blog), which aims to develop a strong Artificial General Intelligence (AGI) capable of comprehending the universe and solving various problems, such as understanding dark matter and unraveling the mysteries of gravity. Musk has emphasized that the ultimate goal of x.ai is to build a super-intelligent AI to understand the true nature of the universe.
This is the Company's first external capital raise and he is raising $3-4 billion at close to an ~$18 billion valuation. To be clear, there are no financials available on the Company (as of now) and no financial projections. The Company has raised all money to date internally / from Elon and this is the first outside capital raise they are doing.
Here is a good article from Chamath Palihapitiya on Xai (Grok) and why it is differentiated from the rest of the AI Companies (OpenAI, Anthropic, etc.) :
https://chamath.substack.com/p/large-language-models-how-to-train The company's team includes individuals with experience from prominent organizations such as OpenAI, Google Research, and Microsoft Research, and it is advised by experts in AI safety. x.ai is set to work closely with other companies, including Tesla and Twitter, to achieve its ambitious mission. Additionally, x.ai researchers will focus on science and building applications for enterprises and consumers. Elon Musk has also stated he intends for x.ai to become a standalone application. Generative AI is set to become a $1.3T market by 2032. xAI has the elements for success - live data, distribution, access to significant capital and a strong technical team.
The investment is a bet on Elon Musk; his current/past successes include Tesla ($500B+) and SpaceX ($150B+), among others. Notably, “Musk told British Prime Minister Rishi Sunak he thought AI was "the most disruptive force in history." The technology will be able to "do everything" and make employment as we know it today a thing of the past, Musk speculated at the first global AI Safety Summit, in Bletchley Park, England.” The statement suggests that there may be a similar upside with X.AI.
Elon Musk was a cofounder of OpenAI, the world’s most valuable AI company. Musk has attracted top AI talent (at OpenAI that included cofounder Ilya Sutskever), investors, and partners. xAI’s founding team consists of former DeepMind, OpenAI, Google Research, Microsoft Research, and Tesla talent, who have contributed some of the most important developments in the field. Musk’s companies develop products at pace - it took them just 4 months to build Grok, their large language model (LLM) and launch it to 550m users for a subscription fee.
Allocation: $2mm (first come, first serve)
Target Returns: MOIC of 3.0x to 10.0x
Minimum Investment: $50,000
Fees: 2% asset management fee; 22% carry 1x to 3x, 27% carry between 3x and 4x, 32% carry 4x+
Hold Period: 3-7 years
Timeline: Commitments needed by Friday, April 12th, 2024, Funding by end of April 2024
Pros: What is interesting is why Twitter may have been part of a larger plan of Elon's to basically get real-time data to feed X.ai models to make them way more efficient and powerful than other AI platforms out there. This is a complete bet on Elon Musk, his ability to attract talent, capital, and ingenuity in building sophisticated AI models that will compete with OpenAI, Google, Anthropic, and others.
Cons: I'm going to be frank here and say there is probably no fundamental technical or quantitative analysis I could possibly do to justify this valuation or perhaps the investment as a whole. Elon certainly has a history of multiple billion dollar wins, but there have been a fair share of snags as well (SolarCity, Twitter, recent underperformance of Tesla). But if you get in early enough in most of these deals, you have made money. There could be a chance that this is part of an AI valuation creep, or perhaps it is the beginning of something much bigger.
Overall: This is simply a bet on Elon - if you love him, then this may be interesting for you. If not, there's not a lot of fundamental analysis or information availability to go on for this valuation. Nonetheless, it's Elon and its AI and we have the opportunity to invest as many of you have requested.
