Elon Musk’s artificial intelligence start-up xAI is in talks to raise up to US$6-billion at a proposed valuation of $20-billion, the Financial Times reported (paywall) on Friday, as the billionaire entrepreneur looks to mount a challenge to OpenAI.

The start-up has been in talks with family offices in Hong Kong and is targeting sovereign wealth funds in the Middle East for the funding, according to the report, which cited multiple people familiar with the matter.

The AI race has been heating up with several investors signing big cheques for start-ups looking to capitalise on what has captured Silicon Valley’s attention over the past year.

A $6-billion fundraise would be much higher than the $1-billion goal xAI had set last month in a filing with the US Securities and Exchange Commission.

At $20-billion, xAI’s valuation would be a fraction of OpenAI’s, but in line with some other peers such as Google-backed Anthropic.

Musk has approached investors in Japan and South Korea for the latest fundraise, the Financial Times reported. His office did not immediately respond to a request for comment.

Morgan Stanley is coordinating the fundraise, according to the report. The bank was one of several that helped finance Musk’s takeover of social media platform X, formerly known as Twitter.

Last week, Musk denied a report that xAI had secured $500-million in commitments from investors toward a $1-billion funding goal.

Vocal

The CEO of Tesla has been vocal about his plans to build safer AI. Musk co-founded OpenAI in 2015, but stepped down from its board in 2018. Last year, xAI launched “Grok”, a chatbot rivaling OpenAI’s ChatGPT.

Musk also warned about developing AI and robotics outside Tesla, earlier this month, unless he gets more voting control at the electric vehicle maker. He said he would be uncomfortable building Tesla into an AI leader unless he had 25% voting control.