How to invest in xAI pre-IPO

While ChatGPT and its parent company OpenAI might be the first thing many people think of when it comes to AI, that's far from the only player in the AI space. Increasingly, competitors are popping up, including Elon Musk's xAI.

xAI's flagship offering is an AI assistant/chatbot called Grok that's integrated into X, the social media network formerly known as Twitter. Grok shares some similarities with ChatGPT but also has capabilities like image generation, whereas OpenAI handles that through a separate tool from ChatGPT.

Like OpenAI, of which Musk was part of the founding team but has since left, xAI has quickly attracted significant investor interest, with a last-known valuation of $24 billion.¹

Although xAI is still in the early private fundraising stages, most recently completing its Series B funding round,² investors may still be able to get in on the action before it goes public (if at all), even if you can't directly participate in a fundraising round.

Here, we'll take a closer look at how to invest in xAI stock pre-IPO.

xAI: Company background

xAI was founded by Elon Musk, who also serves as CEO of major companies like Tesla and SpaceX. The company announced its debut in July 2023 "with the mission to understand the universe," according to xAI.³

Its founding team of 12, including Musk, includes a deep well of AI and computing experience, such as with former research engineers and scientists from companies like OpenAI and Google coming together.⁴

xAI also has Dan Hendrycks, executive and research director at the Center for AI Safety, serving as an advisor.⁵

xAI stock and funding history

xAI has only been around since 2023, so its stock and funding history is fairly limited. However, in December 2023, xAI filed with the SEC to sell up to $1 billion in stock in a private placement (i.e., a private funding round), noting that $134.7 million worth of equity had already been sold. The minimum investment for this private placement was listed as $2 million.⁶

Then in May 2024, xAI announced that it completed its Series B funding round, raising $6 billion from investors such as Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity, and Saudi billionaire Prince Alwaleed Bin Talal and his investment company, Kingdom Holding.⁷ That funding round brought xAI's post-money valuation to $24 billion.⁸

How to buy xAI stock

As a private company, there are limited ways to buy xAI stock and the company may require minimum investment thresholds.

That said, accredited investors may be able to trade existing shares of xAI stock pre-IPO through a private marketplace such as Forge. However, that depends on existing shareholders deciding to list shares for sale, but when they do, that opens up opportunities for a broader pool of investors.

xAI Forge Price was $11.97 as of October, 28^th 2024. Forge Price is calculated based on a proprietary model incorporating pricing inputs from primary funding round information, secondary market transactions and indications of interest (IOIs) on Forge.Forge Price is calculated based on a proprietary model incorporating pricing inputs from primary funding round information, secondary market transactions and indications of interest (IOIs) on Forge.

Who can invest in xAI pre-IPO?

Typically, investing in private companies such as xAI is limited to accredited investors, and startups are traditionally more selective about who they court for funding rounds. Unless they're raising money through broad means such as crowdfunding — which xAI has not — then typically only select institutional investors like venture capital firms or certain high-net-worth investors that have pre-existing relationships with startup teams have direct access to private fundraising rounds.

Yet a broader range of investors may be able to invest in startups like xAI when existing shareholders — such as early employees or investors — list shares for sale on a private marketplace like Forge. However, investing through a private marketplace still requires investors to be accredited, meaning they meet certain financial or professional criteria, yet these are likely easier to meet than, minimum investment thresholds xAI might require.

Where to buy pre-IPO xAI stock

Accredited investors may be able to buy pre-IPO xAI stock through a secondary marketplace such as Forge, subject to availability. Existing shareholders of xAI stock first need to decide to list shares for sale on Forge, which generally makes liquidity more limited compared to publicly traded stocks.

However, xAI shares have already traded on Forge,⁹ so interested investors may wish to create an account and speak with a Forge Private Market Specialist to see how they may be able to invest in pre-IPO xAI stock.

Alternatives for investors who want to buy xAI stock

Since xAI is a private company, retail investors may not be able to directly buy xAI stock, unless it goes public. However, there are no announced plans for that to happen at this time. Still, retail investors may be able to get some access to xAI stock or obtain related exposure through other public market investments.

For one, investors might invest in Tesla, a publicly traded company that Musk also leads, given some rumored integrations between the companies. However, this is certainly not without its risks. For example, the Wall Street Journal reported in September that xAI would license technology to Tesla in exchange for some Tesla revenue,¹⁰ although Musk denied this report.¹¹ In addition, some Tesla shareholders filed a lawsuit against Musk and Tesla board members in June, alleging that xAI is undermining Tesla by diverting talent and resources from Tesla. ¹²

Given this uncertainty regarding the relationship or potential lack thereof between Tesla and xAI, some retail investors might instead prefer to invest in other publicly traded AI-related companies. That could mean investing in companies specializing in AI software and/or hardware, or it could mean investing in tech giants like Alphabet, Meta, and Microsoft that have AI arms of their businesses.

Depending on which stocks you choose, that could mean investing in a complementary or competing company to xAI.

Investors can also diversify by investing in a mutual fund or ETF that allocates to a wide range of AI-related companies, some of which might work with xAI and some of which may compete.

How to analyze xAI stock

Since it's still early days for xAI as a company, there's limited information that can be used to analyze xAI's stock. However, investors might look at data such as its primary funding rounds and its private market trading activity on secondary marketplaces like Forge to compare xAI stock to other AI and tech-related private company stocks.

Investors also might look at the stocks of other companies Musk is involved in, including Tesla as a public stock and SpaceX as a private company. That's not to say that xAI will necessarily follow these companies' trajectories, but you might look at the track record of xAI's leadership as part of your analysis.

Similarly, you might look at the valuations and performance of publicly traded companies involved in AI compared to xAI to get a sense of what could be possible as xAI scales. Again, there are no guarantees xAI will follow a similar path, but that could be another data point in your analysis.

Moreover, looking at AI industry trends and regulations could help you get a sense of the market potential for companies like xAI.

Get started investing in xAI on Forge

If you want to invest in xAI pre-IPO, create an account with Forge Markets to access our deep marketplace of private market securities.

When you create a free account, you'll be connected with a Forge Private Market Specialist to determine your eligibility, and from there you can potentially buy and sell private market shares in xAI and other startups.

Forge stands out for its transparency into what can otherwise be an opaque private market, and as a publicly traded company itself, Forge provides a regulated, proven way to invest in the private market.