Given the overlapping nature of Elon Musk’s Business Networkit’s not uncommon for investors in one of the billionaire’s companies to back his other projects, often representing a broader bet on Musk himself. This is the case of several investors in Musk’s acquisition in 2022 of Twitternow X, who are now set to receive a windfall from their stakes in xAIthe AI startup Musk launched last year to compete with OpenAI, the creator of ChatGPT.
There’s no doubt that Musk’s $44 billion purchase of X hasn’t really paid off financially. investors as Oracle CEO Larry Ellisonco-founder of Twitter Jack Dorsey and cryptocurrency exchange Binance. In October, Fidelity Investments, another X investor, estimated that the value of the social media company had fallen to $12.5 billion. But Fidelity, alongside other backers of X, offset much of those losses through their stakes in xAI.
The AI startup, which so far counts chatbot Grok as its main product, has seen rapid growth in recent months. In November it would have been raised $5 billion in a round that more than doubled its previous valuation to $50 billion. In addition to participants like Valor Equity Partners, CoreNest Capital and the Qatar Investment Authority, the round attracted X backers like Andreessen Horowitz And Sequoia Capitalwho also previously participated in a $6 billion Series B round which valued the startup at $24 billion in May.
In addition to pumping a total of $11 billion into xAI, the fundraising means that investments in Musk’s tangled ecosystem could finally pay off — for now. Here’s a closer look at some of X’s backers who are poised to reap the rewards of xAI’s skyrocketing valuation:
Loyalty investments
Fidelity, which backed Musk’s acquisition of X through its Blue Chip Growth Fund, valued its initial stake in X at $19.66 million. Fidelity’s subsequent estimates showed a significant decline in value, with its stake valued at around $4.2 million in September. Although this figure reached $5.5 million in October, it still represents a 72% decrease from 2022.
But the mutual fund manager, which also backed xAI in its May funding round, has seen its investments in Musk’s AI startup move in a more positive direction. Valued at $44 million in September, Fidelity estimated in October that its stake in xAI had grown 70% to $75 million.
Prince Alwaleed bin Talal
One of Twitter’s first investors, Saudi Arabia Prince Alwaleed bin Talal pledged $1.9 billion for Musk’s $44 billion acquisition in 2022. Given Fidelity’s estimates of X’s plummeting value, its stake is now expected to be worth around $530 million, but l The investor doesn’t seem too concerned about the social platform losing money, he told the Washington Post. Post in September that it is still “very happy with the alliance with Mr. Musk.»
Despite a decline in X’s value, Prince Alwaleed and his investment company Kingdom Holding also participated in xAI’s $5 billion fundraising earlier this year. During the funding round, Kingdom Holding invested $400 million in xAIaccording to financial documents first reported by independent journalist Wendy Siegelman.
Andreessen Horowitz
Andreessen Horowitz, a venture capital firm that helped finance supported Musk’s startup during its fundraising in November.
As one of the largest venture capital firms investing in AI companies, Andreessen Horowitz’s portfolio includes Mistral AIa French startup founded by the former deep mind And Meta (META) researchers; Global LaboratoriesA new business from Stanford Fei Fei Li; And Safe superintelligencewhat was recently launched by former OpenAI Chief Scientist Ilya Sutskever. The company’s bet on AI has even seen Andreessen Horowitz establish a AI Chip Loan Program which rents graphics processing units (GPUs) to startups in exchange for equity.
Sequoia Capital
Sequoia Capital has long-standing ties to Musk’s companies, having invested in EspaceX And The boring society. Roelof Bothathe managing partner of the venture capital firm, previously worked on PayPal (PYPL) with Musk and in 2022 vouched for his leadership of while committing $800 million to the buyout, an investment that is now only worth about $224 million.
Given its history of Musk-related investments, it’s no surprise that Sequoia participated in both of xAI’s funding rounds this year. The company channeled around $150 million in AI companies like xAI, OpenAI and Safe Superintelligence, said partner Sequoia Pat Grady in September, adding that even more funds were invested in startups working at the application level.