## Elon Musk's xAI: Tesla's $5 Billion Gamble?

Elon Musk, the visionary behind Tesla, SpaceX, and more, is taking on the world of artificial intelligence with his newest venture, **xAI**. This startup, aiming to rival the likes of Google, Microsoft, and OpenAI, has already raised $6 billion and achieved a valuation of $24 billion. 

But Musk's ambitions don't stop there. He's now asking Tesla shareholders to consider a **$5 billion investment** in xAI, with plans to potentially integrate xAI's software, **Grok**, into Tesla vehicles. 

Grok, billed as a politically incorrect and witty AI chatbot, is still in its early stages compared to its competitors. However, Musk believes it has the potential to **advance Tesla's Full Self-Driving technology** and build a new data center.  

This decision has raised eyebrows, as Tesla recently reported disappointing second-quarter earnings, with revenue declining in its core automotive segment.  

The move highlights Musk's unwavering commitment to AI and his vision for its role in the future of Tesla. However, it remains to be seen if shareholders will approve the investment and if Grok can truly deliver on its promises.

During the Tuesday earnings call, shareholders asked Musk whether Tesla might invest in xAI and integrate xAI's software, named Grok, into its vehicles. 

Elon Musk's xAI: Will Tesla Invest $5 Billion in AI Startup?

### The Rise of DeepTech
In recent years, **DeepTech** has surged to prominence within the world of technology innovation, delivering groundbreaking advancements in fields such as **semiconductors**, **quantum computing**, **sustainable energy**, **advanced materials**, and **synthetic biology**.

### What is DeepTech?
DeepTech refers to innovative technologies based on substantial **scientific** or **engineering breakthroughs**. Purists might even limit this to tech based on physical sciences, often referred to as **HardTech**. The consensus among DeepTech enthusiasts is that if a piece of technology can be developed by 20 engineers within a year, it is NOT considered DeepTech.

![Doron Zauer, General Partner at Earth & Beyond Ventures](https://pic1.calcalist.co.il/picserver3/crop_images/2024/10/27/ryxWjIjeye/ryxWjIjeye_0_0_1507_848_0_x-large.jpg)

### The Need for DeepTech
The current technology infrastructure is not equipped to handle the expected complexity of tomorrow's technology applications, such as **clean energy** and **Generative AI**. Therefore, cutting-edge scientific innovation is essential to establish the next generation of infrastructure.

### Impact on Various Sectors
DeepTech startups are making waves across sectors, with notable examples like **Mobileye**, **Mellanox**, and **SolarEdge**. These startups are foundational for many tech verticals, including **ClimaTech** and **Homeland Security**.

### Overcoming Challenges
Despite facing hurdles such as difficulties in commercializing university research and lengthy R&D cycles, the landscape is changing. AI is accelerating R&D, leading to shorter and more cost-effective development cycles. Recent reports indicate that DeepTech startups are achieving **unicorn status** more frequently and demonstrating greater capital efficiency.

### Growing Investment in DeepTech
Many new VC funds are being established specifically for DeepTech investments. Major generalist VC funds are also increasing their allocations to DeepTech, reflecting a growing confidence in the sector. According to BCG, DeepTech now claims **20%** of global venture capital funding, showing its rising importance.

### Talent Attraction and Economic Impact
Attracting top-tier entrepreneurial talent remains a challenge, but initiatives in training and leadership development are being launched. With ongoing exits in the sector, startup talent is increasingly drawn to DeepTech, which is seen as a field with a high barrier to entry and significant potential for real-world impact.

### The Situation in Israel
The Israeli tech ecosystem is currently challenged by a global economic downturn and civil unrest. However, many believe that increased DeepTech activity can help stabilize the situation by training the workforce and attracting foreign investment. Israel invests **4.9%** of its GDP into DeepTech, leading the world on a per capita basis.

We are on the brink of a DeepTech revolution, and as Israeli founders dive into this realm, the potential is boundless.

“DeepTech can help save Israel’s hobbling startup ecosystem”, writes Doron Zauer, General Partner at Earth &amp; Beyond Ventures

Why Investors Are Embracing DeepTech: The Future of Innovation

### The Early Days of Elon Musk

Elon Musk, the renowned tech billionaire, reportedly **worked illegally** in the United States during the **1990s** while he was a student at **Stanford University**. According to a report by **The Washington Post**, Musk arrived in **Palo Alto, California** in **1995** to pursue higher studies but never graduated from the program he enrolled in.

### Entrepreneurial Beginnings

Instead of completing his education, Musk focused on developing his software company **Zip2**. He received US work authorization around **1997**, but his entrepreneurial activities could have been scrutinized had he attempted to go public. In **1999**, he sold Zip2 for approximately **$300 million**, marking the beginning of his successful ventures that led him to become the **world's wealthiest person**.

### Legal Challenges and Immigration Issues

To maintain a valid work authorization as a student, Musk was required to be enrolled in a full course of study. According to **Leon Fresco**, a former Justice Department immigration litigator, engaging in activities that generate revenue could have put him in a precarious legal situation. Fresco stated, “If you do anything that helps to facilitate revenue creation, such as design code or try to make sales in furtherance of revenue creation, then you’re in trouble.”

### Political Contradictions

This revelation comes amid Musk's support for **Republican presidential candidate Donald Trump**, who has made claims about **undocumented immigrants** impacting America negatively. Musk's endorsement contrasts sharply with his own past as an immigrant entrepreneur. In a **2020 podcast**, Musk mentioned, "I was legally there, but I was meant to be doing student work. I was allowed to do work sort of supporting whatever," highlighting the complexities of his situation.

Musk's narrative is a testament to the **challenges and triumphs** faced by immigrant entrepreneurs in America, showcasing how his early decisions shaped his future successes.

Elon Musk reportedly worked illegally in the US during the 1990s while he enrolled as student at Stanford University. Read the report to know the full story.

How Elon Musk's Early 'Illegal' Work Paved the Way for His Startup Empire

The latest **Global Entrepreneurship Monitor** report highlights transformative trends in entrepreneurship that could reshape the future:

## 1. Young Entrepreneurs on the Rise
The entrepreneurial landscape is witnessing a **significant shift**, with **24% of young adults** (aged 18-24) engaging in entrepreneurial activities. These young entrepreneurs are not just in it for profits; they are motivated by a **passion for social impact** and **sustainability**. However, they face challenges, with a **15% discontinuation rate**, the highest among all age groups, due to factors like inexperience and limited access to capital.

## 2. Tech Gender Gap Narrows
A promising development is the **narrowing gender gap** in the **tech sector**, with only a **1% difference** between male and female entrepreneurs launching businesses in **Information and Communication Technology (ICT)**. While this progress is encouraging, ongoing efforts are needed to ensure **equal opportunities** for women in tech.

## 3. Optimistic Outlook for Black and Hispanic Entrepreneurs
The report also reveals an **optimistic outlook** among **Black and Hispanic entrepreneurs**, who exhibit strong confidence and resilience compared to their white counterparts. This optimism is crucial for overcoming barriers in the entrepreneurial landscape, yet there is still a need for more **equitable ecosystems** that support diverse entrepreneurs.

In conclusion, the GEM report emphasizes a future driven by **youth, diversity, and purpose** in entrepreneurship, highlighting the importance of providing resources and support for young innovators to succeed.

These three entrepreneurship trends from the new Global Entrepreneurship Monitor report are changing the landscape for the future.

Discover the 3 Groundbreaking Trends Shaping the Future of Entrepreneurship

### Kyte's Survival Strategy

**Kyte**, a rental car startup known as the **"best alternative to Hertz,"** is making drastic changes to ensure its survival. The company is **pulling out of almost all major markets** in the U.S. and has **cut its workforce by 40-50%**. 

### Focus on Key Markets

Kyte will now concentrate its operations solely in **San Francisco and New York City** (including Jersey City), where it generates approximately **70% of its revenue**. The decision comes after the company began suspending operations in cities like **Los Angeles, Atlanta, Chicago, Boston, Washington, D.C., Philadelphia, and Seattle**.

### Financial Challenges

In a **capital-constrained environment**, CEO **Nikolaus Volk** emphasized the need to focus on stronger markets. The company has undergone significant growth since raising **$9 million in 2021** and **$60 million in Series B funding in 2022**, aiming to become the **world's largest operator of shared, electrified, and autonomous fleets**. However, Kyte's rapid expansion led to **heavy borrowing** and a **$200 million debt financing deal** in 2022.

### Restructuring for Profitability

Despite ambitious goals, the unit economics were not favorable enough to generate **free cash flow**. After exploring a potential sale, the company opted for a **restructuring** to focus on profitability. Recently, Kyte completed a new fundraising round to support its restructured business but has not disclosed the amount raised.

### Industry Context

The rental and subscription car service sector is facing challenges, particularly for companies investing heavily in **electrification**. Kyte's conservative approach to building its fleet with **electric vehicles** may have helped mitigate potential capital losses. 

*This story has been updated with additional context about revenue and cash flow in Kyte’s markets.*

Rental car startup Kyte, which bills itself as the "best alternative to Hertz," is pulling out of almost all of its major markets in the United States and

Kyte's Bold Move: Shrinking Operations in a Struggle for Survival

**Pharos**, a promising startup from Y Combinator, has successfully raised **$5 million** in seed funding led by **Felicis**. This funding aims to leverage **artificial intelligence** to improve **hospital quality reporting**. The startup is focused on transforming how healthcare facilities manage and report their quality metrics, potentially leading to better patient outcomes and operational efficiency. With the integration of AI, Pharos aims to streamline reporting processes and provide actionable insights for healthcare providers. This innovative approach is set to make waves in the healthcare industry, addressing critical challenges in quality assessment and reporting.

Comprehensive up-to-date news coverage, aggregated from sources all over the world by Google News.

AI Revolution in Healthcare: Pharos Secures $5M Seed Funding to Enhance Hospital Quality Reporting

**Perplexity AI** has responded vigorously to a **copyright-infringement lawsuit** filed by **News Corp's Dow Jones** and **New York Post**. The media giants accuse the startup of engaging in a “massive amount of illegal copying” that detracts from their revenues. In a blog post, Perplexity expressed its **disappointment** and termed the lawsuit as a reflection of an outdated adversarial stance between **media and tech** that is ultimately **shortsighted**. 

Perplexity emphasized the importance of collaboration to create **innovative tools** rather than engaging in legal battles. The startup highlighted its successful **revenue-sharing programs** with other publishers like **Time** and **Fortune**, inviting the Post and Journal to join in partnership. 

The lawsuit isn't an isolated incident; Perplexity noted that there are currently around **three dozen lawsuits** from media companies against generative AI tools. The startup argues that the complaints indicate a desire to restrict the technology rather than adapt to it. **News Corp's CEO** has accused Perplexity of **willfully copying** material without compensation, which Perplexity disputes, claiming that the lawsuit contains **misleading allegations**. 

Perplexity asserts it is not going anywhere and looks forward to a future where it can focus on developing **innovative solutions** in collaboration with media companies. In a notable accolade, the **Wall Street Journal** ranked Perplexity as the **No. 1 chatbot** in its **“Great AI Challenge”**, surpassing competitors like **ChatGPT** and **Google's Gemini**.

AI startup Perplexity responded to a copyright-infringement lawsuit filed against it by News Corp's Dow Jones and New York Post.

Perplexity AI Takes a Stand Against News Corp's Lawsuit: A Clash of Innovation and Copyright

### Lilium Faces Financial Turmoil

After **seven years** since its inaugural test flight, **Lilium**, a German electric air taxi manufacturer, has unfortunately run out of funding and filed for **insolvency** for its two primary subsidiaries. This decision follows a failed attempt to secure a **$54 million** emergency funding injection from the German government, despite having raised over **$1 billion** from various investors throughout its operations.

### Regulatory Challenges and Recent Partnerships

The timing of this insolvency is particularly concerning, as it coincides with the **US FAA** announcing new regulations for **"power-lift" (VTOL)** aircraft, which could have opened doors for Lilium to navigate regulatory challenges and bring its aircraft to market. Just days prior to this announcement, Lilium had revealed a partnership with **GE Aerospace** aimed at developing scalable flight data management solutions to enhance safety standards for eVTOL operators.

### Funding Difficulties and Future Prospects

Lilium's co-founder, **Daniel Wiegand**, previously indicated that the company had **$205 million** in the bank, allowing operations to continue through this year but not into the next. A **$250 million** funding round was initiated, but it ultimately fell short of keeping the company afloat. Lilium was originally set to deliver its first two **Jet** aircraft by **2026** and had secured orders for **20 jets** from **UrbanLink** and **100 jets** from Saudi Arabia's flag carrier.

### Hope for Recovery

The company is optimistic that its two German subsidiaries, **Lilium GmbH** and **Lilium eAircraft GmbH**, can attract new investors and may operate under the supervision of a custodian during insolvency proceedings. CEO **Klaus Roewe** expressed hope for a fresh start for the **Lilium Jet** after the self-administration process is completed.

### Competitors Making Strides

Meanwhile, other eVTOL companies are making significant progress. **Joby Aviation** recently received **$500 million** in funding from **Toyota** and has initiated a public stock offering to raise an additional **$200 million**. Likewise, **Archer Aviation** successfully completed its first hover-to-horizontal transition flight and has achieved over **400 test flights** in 2024, intensifying the competition in the eVTOL market.

Seven years after its first test flight, German electric air taxi manufacturer Lilium has run out of funding, and filed for insolvency for its two subsidiaries. It failed to raise an emergency injection of $54 million to continue its operations.

Elon Musk's xAI: Will Tesla Invest $5 Billion in AI Startup?

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Elon Musk's xAI: Tesla's $5 Billion Gamble?

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Other Latest News

Why Investors Are Embracing DeepTech: The Future of Innovation

How Elon Musk's Early 'Illegal' Work Paved the Way for His Startup Empire

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AI Revolution in Healthcare: Pharos Secures $5M Seed Funding to Enhance Hospital Quality Reporting

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Kyte's Bold Move: Shrinking Operations in a Struggle for Survival

AI Revolution in Healthcare: Pharos Secures $5M Seed Funding to Enhance Hospital Quality Reporting

Perplexity AI Takes a Stand Against News Corp's Lawsuit: A Clash of Innovation and Copyright

Lilium's Financial Struggles: The eVTOL Taxi Startup's Journey to Insolvency