Major Investors Back $250M Tender Offer in Musk’s xAI
A consortium of prominent venture capital firms and institutional investors is set to purchase approximately $250 million worth of shares in xAI, Elon Musk’s artificial intelligence venture.
The deal, structured as a tender offer, enables both current and former employees of xAI to sell a portion of their holdings to backers such as TPG, ARK Invest, and Sequoia Capital. Among the most notable participants is Fidelity, which intends to invest $20 million through the offering. The transaction values xAI at a staggering $113 billion, the documents reveal.
Separate Talks Hint at Even Larger Capital Raise
This share purchase is distinct from broader capital-raising discussions reportedly underway at xAI. According to insiders, the company has been in talks with additional investors about raising up to $20 billion in fresh capital — potentially driving its valuation as high as $120 billion.
The tender offer underscores a growing wave of investor confidence in xAI and its ambitious integration with Musk’s other ventures. In March, xAI formally acquired the social media platform X — formerly Twitter — which Musk had purchased in late 2022 for $44 billion.
xAI’s Grok vs. ChatGPT: A New AI Rivalry
As a generative AI company, xAI has quickly drawn attention for Grok, its AI chatbot that positions itself as a competitor to OpenAI’s ChatGPT. The move intensifies the race in the large language model space, where xAI now joins a tightly contested field.
Many of the firms involved in the tender offer have longstanding financial relationships with Musk. Several, including Fidelity and Sequoia Capital, have previously invested in his companies, notably electric vehicle manufacturer Tesla and private space firm SpaceX.
Fidelity’s Role and Revaluation of Twitter
Fidelity’s participation is particularly notable given its history with Musk. The firm had backed his Twitter acquisition, but later revised the platform’s valuation to below $10 billion as of last year, according to regulatory filings.
Despite that markdown, Fidelity remains bullish on Musk’s future ventures, signaling strong faith in the combined power of xAI and X to reshape the digital and AI landscapes.
Human Capital Adds Political Dimension
Also joining the investor lineup is Human Capital, a boutique venture capital firm based in the Bay Area. The firm’s co-founder, Baris Akis, rose to prominence during the U.S. presidential transition period, aligning closely with Musk, who had endorsed Donald Trump at the time. Akis has since become a trusted advisor in Musk’s orbit.
No Comment from Stakeholders
When approached for comment, xAI declined to respond. Similarly, representatives from Fidelity, TPG, ARK Invest, Sequoia Capital, and Human Capital did not provide statements.
"This tender offer represents not only a liquidity event for early xAI stakeholders but also a clear signal of confidence from the market in Elon Musk's latest AI venture." — Senior Analyst, New York-based Investment Firm
