Elon Musk’s xAI Just Doubled Its Valuation to $50B—Here Are 4 Biggest Winners?
Given the overlapping nature of Elon Musk’s web of companies, it isn’t unusual for investors in one of the billionaire’s ventures to back his other projects in what often represents a broader bet on Musk himself. This is the case for several investors in Musk’s 2022 acquisition of Twitter, now X, who are now set to receive a windfall from their stakes in xAI, the A.I. startup Musk launched last year to compete with the likes of ChatGPT-maker OpenAI.
There’s no question that Musk’s $44 billion purchase of X hasn’t exactly paid off financially for investors like Oracle CEO Larry Ellison, Twitter co-founder Jack Dorsey and cryptocurrency exchange Binance. In October, Fidelity Investments—another X investor—estimated that the social media company’s worth had fallen to $12.5 billion. But Fidelity, alongside other X backers, have made up much of these losses through their stakes in xAI.
The A.I. startup, which counts the chatbot Grok as its main product thus far, has grown rapidly in recent months. In November, it reportedly raised $5 billion in a round that more than doubled its previous valuation to $50 billion. Besides participants like Valor Equity Partners, CoreNest Capital and the Qatar Investment Authority, the round drew in X backers like Andreessen Horowitz and Sequoia Capital, who also previously participated in a $6 billion Series B round that valued the startup at $24 billion in May.
Besides injecting a total of $11 billion into xAI, the funding rounds signify that investments in Musk’s tangled ecosystem might finally be paying off—for now. Here’s a closer look at some of the X backers who are set to reap the rewards of xAI’s soaring valuation:
Fidelity Investments
Fidelity, which backed Musk’s X acquisition through its Blue Chip Growth Fund, valued its initial X stake at $19.66 million. Subsequent estimates from Fidelity showed a significant dip in value, with its stake valued at around $4.2 million as of September. Although this figure rose to $5.5 million in October, it still represents a 72 percent decrease from 2022.
But the mutual fund manager, which also backed xAI during its May funding round, has seen its investments in Musk’s A.I. startup move in a more positive direction. Valued at $44 million in September, Fidelity in October estimated that its xAI stake rose by 70 percent to $75 million.
Prince Alwaleed bin Talal
An early Twitter investor, Saudi Prince Alwaleed bin Talal pledged $1.9 billion towards Musk’s $44 billion acquisition in 2022. Taking into account Fidelity’s estimates of X’s plunging value, his stake should now be worth around $530 million—but the investor doesn’t seem too bothered about the social platform losing money, telling the Washington Post in September that he is still “very happy with the alliance with Mr. Musk.”
Despite a drop in X’s value, Prince Alwaleed and his investment company Kingdom Holding additionally participated in xAI’s $5 billion fundraising earlier this year. During the round, Kingdom Holding invested $400 million in xAI, according to financial filings first reported by the independent journalist Wendy Siegelman.
Andreessen Horowitz
Andreessen Horowitz, a venture capital firm that helped fund Musk’s X takeover with a $400 million investment now valued at around $112 million, also participated in xAI’s May funding round and backed Musk’s startup during its November fundraising.
As one of the largest VC firms investing in A.I. companies, Andreessen Horowitz’s portfolio includes the likes of Mistral AI, a French startup founded by former DeepMind and Meta (META) researchers; World Labs, a new venture from Stanford’s Fei-Fei Li; and Safe Superintelligence, which was recently launched by former OpenAI chief scientist Ilya Sutskever. The firm’s A.I. bet has even seen Andreessen Horowitz establish an A.I. chip lending program that rents graphics processing units (GPUs) out to startups in exchange for equity.
Sequoia Capital
Sequoia Capital has longstanding ties to Musk’s companies, having invested in SpaceX and The Boring Company. Roelof Botha, the managing partner of the venture capital firm, previously worked on PayPal (PYPL) with Musk and in 2022 vouched for his leadership of X while committing $800 million towards the takeover—an investment now worth around only $224 million.
Given its history of Musk-related investments, it should come as no surprise that Sequoia participated in both of xAI’s funding rounds this year. The firm has funneled around $150 million into A.I. companies like xAI, OpenAI and Safe Superintelligence, said Sequoia partner Pat Grady in September, adding that even more funds have been invested into startups working at the application layer.