Musk's AI startup xAI raised $20 billion from Nvidia and Cisco, with a valuation of $230 billion.

Elon Musk's startup xAI, which is developing the Grok AI, has raised $20 billion, exceeding its initial target of $15 billion, the company said. xAI was funded by Nvidia and Cisco Systems, among others, both of which are collaborating with it as suppliers and strategic partners, CNBC reports. Nvidia planned to invest up to $2 billion, Bloomberg previously reported .

According to the TV channel, the new round will value the startup at approximately $230 billion.

Investors also included long-standing partners of Musk's companies: Valor Equity Partners, Stepstone Group, Fidelity, the Qatar Sovereign Fund, MGX from Abu Dhabi, and Baron Capital Group.

"This funding will accelerate the deployment of our world-class infrastructure, enable the rapid development and deployment of transformative AI products reaching billions of users, and support breakthrough research advancing xAI's core mission of understanding the universe," the company said in a statement.

As previously reported by Bloomberg sources, xAI planned to split the financing into approximately $7.5 billion in equity capital and $12.5 billion in debt arranged through a special purpose vehicle. The startup is using this structure to purchase Nvidia processors, which it will then lease for a period of five years, allowing investors to recoup their investment, the agency's sources explained. Raising capital is particularly critical for xAI: according to CNBC, it received about $15 billion last year, but still needs additional funds as it spends about $1 billion a month, Bloomberg sources said.

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