OpenAI has successfully raised $6.6 billion in a significant funding round, elevating its valuation to $157 billion and reinforcing its mission to develop premier generative AI technology.
The funding round, spearheaded by Thrive Capital, contributed $1.3 billion, while Microsoft, OpenAI’s largest investor, added $750 million to its existing $13 billion stake. Other notable investors included Khosla Ventures, Fidelity Management & Research, and Nvidia, the latter of which provides essential technology for AI advancements. Microsoft declined to comment on the investment.
This funding deal ranks among the largest private investments in history, positioning OpenAI as one of the top three venture-backed startups, alongside SpaceX and ByteDance. The considerable size of this investment reflects the tech sector’s strong belief in AI’s transformative potential and the substantial financial commitments required for its research.
Tiger Global Management invested $350 million, and Altimeter Capital contributed at least $250 million. Global participants included SoftBank, which invested $500 million, and the Abu Dhabi-based MGX investment firm. OpenAI indicated that the funds will enhance its AI research and computing capabilities. CFO Sarah Friar stated, “AI is already personalizing learning, accelerating health care breakthroughs, and driving productivity. And this is just the start.”
The impressive valuation has drawn attention in Silicon Valley, with Altimeter’s CEO Brad Gerstner noting the shock surrounding OpenAI’s $150 billion valuation. He mentioned that the startup anticipates generating over $10 billion in revenue next year, suggesting that a tenfold revenue multiple is reasonable for a company poised for an IPO, citing Google and Facebook as examples.
Gerstner expressed hopes for OpenAI to go public soon, calling it “the most important AI company in the United States, next to Nvidia.” Apple Inc. did not participate in this funding round, despite earlier discussions about investing. Apple collaborates with OpenAI to integrate ChatGPT into its devices and Siri, but plans for a board observer role were reportedly abandoned.
Some funds were raised through special purpose vehicles, allowing investors to pool money to acquire shares. OpenAI did not comment on these arrangements.
This financing comes after a tumultuous year for OpenAI, including the firing and quick rehiring of CEO Sam Altman in November. The company has since revamped its board, hired hundreds of new staff, and experienced the departure of key leaders like co-founder Ilya Sutskever and Chief Technology Officer Mira Murati.
OpenAI is contemplating a shift from its nonprofit structure to a for-profit model, which could address investor concerns but may present legal challenges. Discussions include granting Altman equity in the company, potentially valued over $10 billion, though specific figures have not been disclosed by the board.
Since launching its chatbot, ChatGPT, in 2022, OpenAI has captivated the tech industry, amassing 250 million weekly active users. Its subscription service, ChatGPT Plus, has around 11 million subscribers, while its business-oriented service boasts over one million users.
As competition intensifies, numerous startups have emerged to rival OpenAI, many founded by former employees. Major tech companies, including Google and Amazon, are also developing their own AI models.
In this funding round, OpenAI discouraged investments in rival firms like Anthropic or Elon Musk’s xAI, and notable venture capital firm Sequoia Capital opted not to participate.
