Original Article Title: "Musk Steps Down from DOGE, Underlying Companies See Financing Wave: xAI Equities and Bonds Issued, Neuralink Also Fundraising"

Original Article Author: Hao He, Wall Street News

After Musk returned to his commercial empire and distanced himself from politics, his affiliated companies quickly embarked on a series of financing activities, including xAI initiating a $3 billion equity sale plan and launching a $5 billion debt sale. In addition, the brain-machine interface company Neuralink raised $650 million in its Series E financing round.

xAI Equities and Bonds Issued

On Monday, according to media reports, Musk's xAI is initiating a $3 billion equity sale plan, allowing employees to sell shares to new investors. In this transaction, the company's valuation reached $113 billion. This is consistent with Musk's xAI valuation when he acquired his social media platform X in March of this year.

This year, Musk merged xAI with his social platform X into a new company called XAI Holdings. The acquisition deal in March valued the entire group at $113 billion, with xAI valued at $800 billion and X at $330 billion. Musk acquired X (then Twitter) for $44 billion in October 2022.

Industry insiders have pointed out that this secondary stock sale, known as a "tender offer," is expected to be followed by a larger round of financing, where the company will issue new shares to external investors. Previously in April, media reports indicated that xAI was in discussions with investors, planning to raise approximately $20 billion for its newly merged AI startup and social media businesses, highlighting the market's enthusiasm for artificial intelligence and Musk's influence.

In addition, Musk also initiated a $5 billion debt sale for xAI. According to media reports, Morgan Stanley is seeking debt financing for xAI, which may help Musk continue to heavily invest in AI infrastructure, particularly in building a large data center, Colossus, in Memphis.

Media reports citing sources familiar with the matter revealed that this debt financing scheme includes Class B Term Loans, fixed-rate Term Loans, and senior secured notes. This funding will be used for general corporate purposes, with a maturity date of June 17. xAI declined to comment on the above news.

Elon Musk previously stated that merging xAI with X would enable his two companies to achieve synergies through integrating models, computing power, distribution channels, and talent. For example, AI developers could better utilize data from social media platforms to train their models and engage with their user base. Musk did not further disclose the specific structure of the March merger between xAI and X. Some analysts suggest that this opaque transaction allowed X to leverage the continuously rising valuation of xAI for support.

In 2023, Musk founded xAI to challenge Sam Altman's OpenAI and other major tech companies. xAI, this AI startup, received a valuation of $45 billion in a $5 billion private fundraising round at the end of last year. Musk also granted xAI a 25% stake to investors supporting his acquisition of Twitter last year.

xAI quickly launched the Grok chatbot and built the Colossus supercomputer cluster, one of the largest AI data center projects in the United States. Apart from competing with major tech companies and sometimes appearing "rough" with Grok, Musk also entered into some partnership agreements. Last month, Microsoft announced it would provide xAI models to its cloud computing customers, while the messaging app Telegram also agreed to distribute Grok to its 1 billion users.

On May 20, Musk previously revealed that his Memphis data center had deployed 200,000 GPUs for training AI systems, and he plans to add 1 million GPUs at another location nearby.

Neuralink Raises $650 Million

Media reports indicate that Musk also raised $650 million for his brain-machine interface company, Neuralink, valuing it at $9 billion, excluding this new investment. Neuralink's valuation in the previous funding round was $3.5 billion, which took place in 2023.

Musk Returns from DOGE to Business Empire

Musk previously spent several months serving as a senior advisor to Trump, frequently accompanying him to events and providing strong support for Trump's 2024 presidential campaign, being one of his major donors. Musk's position at the Department of Government Efficiency (DOGE) in the U.S. ended last week, during which he launched a large-scale government spending reduction plan, not only triggering widespread criticism of him personally but also raising concerns about his company's performance.

This series of fundraisings occurred after Musk stepped down from his role in the Trump administration, where he was responsible for cutting government spending. Some analysts suggest that Musk seems eager to refocus on his various businesses. Since Trump took office, Tesla's stock price has dropped by 20% while Musk served as CEO.

Musk had previously stated that after his companies were affected by their association with President Trump, he would refocus on his business empire. Musk wrote on X at the end of last month: "Back to 24/7 at X, in conference room/ on the server floor/ in the factory. I have to be hands on with X/xAI and Tesla. We are on the verge of technological breakthroughs."

Original Article Link

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia