Igor Babuschkin is writing himself a second check.
The xAI co-founder left the company in August 2025 to start Babuschkin Ventures, a VC firm. Six months later, he is back as a founder with River AI, a startup seeking $1 billion from General Catalyst at a $5 billion valuation. Babuschkin himself is putting in $100 million of his own money upfront, according to Forbes. Neither party has commented.
Three 'Neolabs' Emerge in Two Weeks
The term 'neolab' has been popping up unusually often in AI talent moves recently. Forbes grouped River AI with two others:
- River AI — founded by xAI co-founder Igor Babuschkin; targeting $1B led by General Catalyst
- Recursive Superintelligence — led by You.com's Richard Socher; $650M raised at $4.65B valuation
- Unnamed — DeepMind's David Silver; currently fundraising
All three share a common goal: not to ship a product for revenue, but to conduct research — specifically, on whether AI can improve itself. Richard Socher told TechCrunch: 'Our main focus is to build truly recursive, self-improving superintelligence at scale, which means that the entire process of ideation, implementation, and validation of research ideas would be automatic.' In plain terms, they want AI to act as its own researcher, automating the entire cycle from idea to validation — aiming to eliminate the researcher role itself.
Who Is Babuschkin and Why He Left xAI
Babuschkin is no ordinary engineer. At DeepMind, he led AlphaStar, the AI that reached grandmaster level in StarCraft II in 2019. He later joined OpenAI and co-founded xAI with Elon Musk in 2023. He left xAI in August 2025, citing a focus on AI safety. Babuschkin Ventures' slogan is 'investing in AI systems that benefit humanity and unlock the mysteries of the universe.' While that may sound like marketing, it comes amid internal turmoil at xAI: over 80 researchers left, SpaceX absorbed the company, and Grok was embroiled in a child-content controversy. Six months later, Babuschkin is starting his own company. River AI was incorporated in Nevada on April 20 and began discussing a $1B round in May — a pace that suggests investors had been lining up for months.
What the $5B Valuation Is Betting On
A $5 billion valuation for a company less than a month old with no public product is striking, but not the priciest among the neolab wave — Recursive Superintelligence is already at $4.65B. The market is betting on the person, not the product. Babuschkin's resume boils down to two achievements: leading one of DeepMind's toughest reinforcement learning projects, and building xAI's Memphis supercomputer with 100,000 GPUs from scratch. Both demonstrate experience in pulling off big things from nothing. General Catalyst is taking most of this round — the same VC that has backed Sierra and Anduril this year. It's not a scattergun investment but a clear bet that AI's next phase will shift from big companies to elite labs of around 10 people. What will River AI build? Forbes says its technical approach and product strategy remain undisclosed. Babuschkin Ventures' public materials point to AI safety and agentic AI. If River AI follows that path, three routes are forming under the 'neolab' label: Recursive (AI self-improvement), David Silver's (undisclosed), and River AI (likely AI safety + agentic). Which route will succeed? The industry may have to wait until year-end for clarity.
Sources: Igor Babuschkin Seeks Up To $1 Billion For River AI (Forbes / Let's Data Science); CocoLoop; What happens when AI starts building itself? (TechCrunch)