OpenAI Explores Corporate Restructuring Amid Soaring Valuation and Funding Interest

ChatGPT-maker OpenAI explores corporate restructuring amid $100 billion valuation talks - Times of India

OpenAI, the artificial intelligence company behind ChatGPT, is considering changes to its corporate structure as it engages in discussions for a new funding round that could value the startup at over $100 billion, according to sources familiar with the matter. The AI company is in talks with investors about restructuring to become more investor-friendly, potentially simplifying its current complex non-profit structure, the Financial Times reports.This move comes as OpenAI pushes ahead with a multibillion-dollar fundraise to maintain its lead over competitors like Google. Venture capital firm Thrive Capital is expected to lead the funding round, with tech giants Apple and Nvidia in discussions to participate for the first time, alongside existing partner Microsoft, sources told the Financial Times. If successful, this would make OpenAI one of the most valuable technology startups in Silicon Valley history. The company's unique corporate structure, which includes a non-profit board governing a for-profit subsidiary, has come under scrutiny. OpenAI's current setup caps profits for investors and states that the "principal beneficiary is humanity, not OpenAI investors," according to company documents. One option under consideration is removing the existing cap on profits for investors in the for-profit subsidiary, sources revealed to the Financial Times. This change could make the company more attractive to financial backers. The fundraising efforts come as OpenAI faces significant financial challenges. The Wall Street Journal reports that the company's rapid growth and hefty spending on AI development have strained its finances, with projections suggesting it could exhaust its cash reserves within a year. OpenAI's Chief Financial Officer, Sarah Friar, informed employees about the ongoing fundraising efforts, citing the need to support computing power and other operating expenses, according to a memo obtained by the Wall Street Journal. The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.

OpenAI funding round gets traction as big tech leans on ChatGPT

OpenAI's latest funding round has drawn interest from the three most valuable tech companies, underscoring how vital the artificial intelligence startup is to the broader industry. Nvidia Corp., the world's biggest chipmaker, has discussed joining a funding round that would value OpenAI at more than $100 billion, people familiar with the matter said. Apple Inc. and Microsoft Corp. have also been in talks about participating in the financing, said the people, who asked not to be identified because the deliberations are private. The proposed round would be led by Thrive Capital, which is investing about $1 billion, Bloomberg reported earlier this week. Nvidia has discussed investing about $100 million, two of the people said. If the discussions move forward, it would mean three of the biggest names in tech would all be backing OpenAI, maker of the groundbreaking ChatGPT chatbot. Each firm has become dependent on the startup in recent years. Microsoft is already OpenAI's biggest funder, having invested roughly $13 billion. Apple, which had a late start in AI, is leaning on OpenAI to help weave artificial intelligence into an upcoming version of the iPhone operating system. And Nvidia will rise alongside the popularity of the tools it powers. Representatives for Nvidia, Apple, Microsoft, OpenAI and Thrive all declined to comment. Also read: Tamil Nadu CM Stalin visits offices of Apple, Google, Microsoft in US; discusses exciting 'partnerships' Big Tech's influence over artificial intelligence has been drawing mounting scrutiny, with regulators in both the EU and US expressing concerns about Nvidia's dominance in AI chips and Microsoft's close relationship with OpenAI. Microsoft has tightly integrated OpenAI's services into its Windows and Copilot AI platforms -- a bet that the capabilities will help drive growth. Apple has existing ties with OpenAI as well. The iPhone maker is adding ChatGPT to its new suite of AI features, called Apple Intelligence. The company also was slated to take a board observer seat at OpenAI -- alongside Microsoft -- but those plans were dropped in July. Nvidia, meanwhile, supplies the critical infrastructure needed to develop and run AI tools like ChatGPT. It's the biggest maker of so-called AI accelerators, sales of which have soared over the past two years. In Nvidia's latest quarterly report, released on Wednesday, revenue more than doubled to $30 billion. It predicted even bigger sales in the current quarter, topping the average analysts estimates, though investors have grown so accustomed to blowout results that the shares still declined. OpenAI Chief Financial Officer Sarah Friar told employees in a memo Wednesday that the company was seeking fresh capital, without giving details, according to people familiar with the matter. The company has been in discussions to raise funding at a valuation at or above $100 billion since at least December, Bloomberg has reported. The financing would bolster one of the world's most valuable venture-backed startups. The runaway success of ChatGPT also has kicked off an arms race among tech companies, which are integrating AI technology across their products and funding other promising startups. In her memo to employees, Friar said that OpenAI would use the financing to acquire more computing power and fund other operating expenses, the people said. The Wall Street Journal previously reported on the discussions with Apple. More stories like this are available on bloomberg.com ©2024 Bloomberg L.P. SHARE Copy linkEmailFacebookTwitterTelegramLinkedInWhatsAppRedditPublished on September 1, 2024