Igor Babuschkin, a founding member of Elon Musk’s xAI, has left the company to start Babuschkin Ventures, a VC firm focused on AI safety and ethics.
Quick Summary – TLDR:
- Igor Babuschkin, co-founder of xAI, officially left the company on August 13, 2025
- He’s launching Babuschkin Ventures to fund AI safety research and responsible AI startups
- His exit highlights growing leadership challenges at xAI amid major public scandals
- The move signals a shift toward dedicated AI safety investment in the venture capital world
What Happened?
Igor Babuschkin, a key figure in the early days of xAI, confirmed his departure from the Elon Musk-backed startup this week. He announced the formation of his own firm, Babuschkin Ventures, which will support AI safety initiatives and startups working in advanced and ethical AI systems. The announcement comes after months of controversy surrounding xAI’s chatbot Grok and increasing scrutiny over the company’s practices.
Babuschkin’s Big Move
Babuschkin shared the news in a heartfelt message on X, reflecting on his time co-founding xAI with Elon Musk in 2023. He recalled their first conversation about reshaping the future of AI, calling it a turning point that led to building a company with a “different kind of mission.”
Today was my last day at xAI, the company that I helped start with Elon Musk in 2023. I still remember the day I first met Elon, we talked for hours about AI and what the future might hold. We both felt that a new AI company with a different kind of mission was needed.
— Igor Babuschkin (@ibab) August 13, 2025
Building…
His new venture, Babuschkin Ventures, will focus on AI safety research and backing technologies that “advance humanity and unlock the mysteries of our universe.” He said the idea crystalized after a dinner with Max Tegmark, founder of the Future of Life Institute, where they discussed how future AI systems must be built safely and ethically.
Fallout and Controversy at xAI
Babuschkin’s departure comes at a turbulent time for xAI. The company’s chatbot, Grok, has been involved in several high-profile incidents including:
- Generating antisemitic posts and praising Adolf Hitler after a faulty code update
- Enabling deepfake-style video generation of public figures, including nude likenesses
- Spreading disinformation about “white genocide” in South Africa due to unauthorized prompt changes
These scandals have drawn attention from regulators, including the European Union, which recently requested a meeting with xAI over safety concerns. Investor confidence has also been shaken, with Grok’s controversial behavior overshadowing xAI’s otherwise strong AI performance metrics.
Leadership Turbulence and Burnout
Babuschkin’s exit appears to be part of a broader wave of executive departures at xAI. Sources say the company is struggling to retain senior technical talent, raising concerns about its internal stability.
He led a team of 29 engineers and played a vital role in building the Memphis supercluster, a powerful AI training facility that helped xAI launch competitive models in record time. However, this same facility has sparked protests in Tennessee due to its use of gas-burning turbines that are reportedly worsening local air quality.
With xAI reportedly burning through $13 billion annually while holding a valuation of $200 billion, the pressure to scale fast and deliver results may be contributing to high leadership turnover.
A New Era for AI Venture Capital?
Babuschkin’s pivot from building frontier AI to funding safe AI signals a growing shift in the industry. As ethical concerns become more pronounced, AI safety is emerging as a standalone investment category. His move suggests that experienced technologists are beginning to see AI safety not just as a moral imperative, but also a smart business opportunity.
In his words, “Building AI that advances humanity has been my lifelong dream.” And with the launch of Babuschkin Ventures, he hopes to help others do just that.
SQ Magazine Takeaway
I think Babuschkin’s exit is about more than one person leaving a company. It shows a deeper split happening in the AI world: between building fast and building responsibly. With so many safety issues boiling over at xAI, his decision to focus purely on ethical AI makes a lot of sense. He’s not running from the field, he’s doubling down on its future. And that’s a sign the AI industry is maturing, fast.
