OpenAI in Talks for Massive Funding Round, Potentially Valuing Company at $150 Billion

OpenAI is showing that the AI race is survival of the richest

This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in. At a $150 billion valuation, OpenAI would almost double the $86 billion value it held during a tender offer earlier this year. It would also vault the company closer to the heights of Elon Musk's SpaceX, reported to be valued at $210 billion, and TikTok's parent company ByteDance, said to be worth almost $230 billion. It's a sign of just how far OpenAI has come since November 2022, when its CEO Sam Altman described ChatGPT as "an early demo of what's possible." It's also a sign of just how expensive the business of training and running AI models is getting. It was only last year that OpenAI revealed that it had secured a $10 billion investment from Microsoft in a deal that extended a partnership first struck in 2019. Back then, in January 2023, OpenAI said it had already worked with Microsoft to "build multiple supercomputing systems" -- powered by the tech giant's cloud platform Azure -- that could be used to train its models. OpenAI said it would deploy that $10 billion investment to further boost these systems. However, as the generative AI boom has progressed since OpenAI launched ChatGPT in late 2022, it has become increasingly evident that making the large language models behind generative AI applications smarter -- a fundamental goal -- is an expensive endeavor. Just look at the spending of Big Tech firms working to improve their AI models. In the last quarter alone, Alphabet, Amazon, Meta, and Microsoft saw capital expenditure hit $52.9 billion -- almost double what it spent in the same quarter in 2023, per The Wall Street Journal. Much of that has been directed toward assets critical for strengthening their AI plays, such as buying expensive chips from the likes of Nvidia and building new data centers to host these chips for training and inference purposes. While privately held startups working on large language models, or LLMs, aren't in the business of building data centers like Big Tech's cloud players, they have been busy trying to secure as many powerful chips as they can. This is to ensure they have enough computing power to build their next-generation models. Industry projections note just how expensive this is going to get. Earlier this year, Dario Amodei, CEO of OpenAI rival Anthropic, noted that it could cost $10 billion to train AI models within the next two years. Pretty soon, that could hit $100 billion. This is a tricky situation for startups, of course, given that they don't have quite the same deep pockets as their publicly traded counterparts. Their traditional funding sources in venture capital may not suffice. According to Bloomberg, OpenAI has lined up blue-chip names, including Apple, Microsoft, and Nvidia as potential backers for its upcoming investment round, alongside lead investor Thrive Capital. That raises the bar for the handful of startup competitors it faces. Amodei's Anthropic seemed to have got the memo, as it raised $2.75 billion from Amazon in March, taking its total raised from the Big Tech firm to $4 billion. It was last valued at $18.4 billion. OpenAI's top Europe rival, Mistral, raised fresh capital at a $6.2 billion valuation in June, with its funding round peppered with big corporate names such as Nvidia and Samsung, alongside VC heavyweights such as A16z and Lightspeed. It remains to be seen which companies will stay the course in the long term. Consolidation has struck the AI industry in recent months, as some top startups trying to build AI models have been gutted. In August, for instance, news emerged that Google had hired Character AI CEO Noam Shazeer -- a former Googler -- along with top talent, and secured a licensing agreement for its LLM technology. As my colleagues Ben Bergman and Sri Muppidi noted last month, the startup's growth "has not been blockbuster and revenue is minimal." As a result, it "did not have enough momentum to raise another big round in today's ultracompetitive funding environment." This looks to be the key challenge going forward for startups seeking to get an edge in the LLM space and cut into OpenAI's lead, especially as profit remains a distance away. OpenAI's annualized revenue is on track to be $3.4 billion this year, a report said in June, though it's not yet profitable. In a recent episode of the No Priors podcast, tech investor Elad Gil suggested that "enormous capital moats are emerging" among startups looking to scale their LLMs to the biggest scale. The goal for many, of course, is AI that is as intelligent as humans. "Everybody's partnering up, and so it's a really interesting question to ask," Gil said. "For all the other players in the market, where are they going to get these ever-rising amounts of capital, and who do they partner with?" AI startups serious about progressing on LLMs will need to figure out the answer to this pretty quickly. Failure may lie ahead if they don't.

OpenAI Aims for a $150 Billion Valuation

Is the sky the limit for OpenAI investors? What a difference a few days make. OpenAI is now in talks to raise about $6.5 billion at a valuation of around $150 billion, The Times reports. Those numbers vastly exceed what ChatGPT's parent company had been seeking not too long ago. If the round comes together -- talks remain fluid, and there's no guarantee they will lead to a deal at those terms -- it would underscore investors' continued enthusiasm for artificial intelligence, even as questions about the future of the sector are piling up. Only last week, OpenAI was seeking about $1 billion at a $100 billion valuation. But belief that the company will continue to lead the A.I. race appears to be driving current and prospective investors -- potential participants in the round include Josh Kushner's Thrive Capital, Microsoft, Apple and Nvidia -- to open their wallets. (OpenAI is also in talks to secure a $5 billion revolving line of credit from banks, according to Bloomberg.) To put the fund-raising effort in context: At $150 billion, the company would also be nearly twice as valuable as Intel. At $6.5 billion, the deal size would be tied for the fifth biggest venture funding round since 2006, according to PitchBook. A $150 billion valuation would be a huge win for Thrive, which led OpenAI's last major fund-raising round at an $80 billion valuation. At that size, questions will grow about the company plans to go public via an initial public offering and add to pressure for it to restructure itself into an entirely for-profit enterprise. OpenAI certainly needs the money. By some estimates, it's burning through $7 billion a year to fund research and new A.I. services and hire more employees. It's expected to introduce more products soon, including a tool that adopts a different reasoning approach than existing chatbots like ChatGPT. And OpenAI is racing against other tech giants, including Microsoft (which has already invested $13 billion in the start-up) to innovate -- and buy up expensive hardware to do it. (Jensen Huang, the C.E.O. of the chipmaker Nvidia, said on Wednesday that demand was so great for his company's processors that relations with partners were getting tense.) But the A.I. business is facing headwinds, raising concerns about overheated valuations. While indexes tracking the so-called Magnificent Seven leaders in A.I. are up sharply year-to-date, they're down from their July highs amid investor worries about the cost of the arms race.

New Funding Round Values OpenAI At $150 Billion: Report

OpenAI is in talks to raise billions of dollars in a new funding round at a valuation of $150 billion to beef up its artificial intelligence (AI) technology and cover operating costs amid stiff competition from Google and Amazon. The ChatGPT maker is now negotiating funding from investors amounting to $6.5 billion, according to a report on Bloomberg News citing people who are familiar with the matter. Another $5 billion will be a bank debt from banks through a revolving credit facility. In late August, reports said OpenAI is negotiating a fresh round of funding that could value the company at over $100 billion. Venture capital firm Thrive Capital will reportedly lead the funding along with Microsoft, which has already invested $13 billion in OpenAI since 2019. In addition, two other tech giants, Apple and Nvidia have also been making plans to invest in the company. OpenAI became the first official partner for Apple Intelligence in June, while Nvidia supplies AI chips, PYMNTS reported. The company's new reported $150 billion valuation would then be a 74% increase from the valuation of $86 billion when employees sold their shares in late 2023. This will establish the company as a force to reckon with in the AI industry, making it a highly valuable startup in the world. OpenAI, led by its CEO Sam Altman, gained worldwide attention for its ChatGPT product and got the backing of Microsoft. The company's ChatGPT, which was accepted and embraced by hundreds of millions around the world has made OpenAI one of the biggest players in the AI industry. Name Pepper noted that latest data showed that ChatGPT has more than 180.5 million monthly users, and that it has 100 million weekly active users. The firm recently released GPT-4o model that combines audio, vision, and text and need funds to spend more on new AI models. With the latest planned billions in capital influx, OpenAI would be able to stay as a private company for a longer time. Reuters noted that many startups avoid going public to avoid regulatory costs and stock market volatility.

OpenAI may reach $150bn valuation as funding talks continue

The AI giant, with a last valuation of $86bn, splashed onto the scene after releasing the groundbreaking ChatGPT in 2022. OpenAI is reportedly aiming to raise $6.5bn from investors including Microsoft, Apple and Nvidia at a valuation of $150bn. Inside sources told Bloomberg that the start-up is also looking to raise $5bn in debt from banks as a revolving credit facility. This comes after similar reports of a funding round surfaced just two weeks ago, which suggested the ChatGPT creator's value would hit more than $100bn. The new valuation will be significantly higher than the start-up's previous valuation of $86bn and will make the company one of the most valuable start-ups in the world. However, sources who remain anonymous, said that the deal is ongoing and the terms could possibly change. OpenAI declined to comment on the reports. The funding is being led by New York-based venture capital firm Thrive Capital, which is expected to provide a $1bn injection. Industry heavyweights Microsoft, Apple and Nvidia are all expected to participate. Microsoft has been OpenAI's largest backer since it released ChatGPT in 2022. Last year, the company integrated many of its tools with OpenAI models, including Bing and Copilot. In July, it gave up its observer seat on OpenAI's board saying it has seen "significant progress" in the AI start-up and no longer feels it's necessary to hold one. This is in the context of ongoing antitrust scrutiny of its ties with OpenAI in the US. The AI start-up recently revealed that more than 90pc of Fortune 500 companies are using its products and that usage of its automated API has doubled since the release of GPT-4o mini in July. OpenAI advertises GPT-4o mini as a model that can perform various tasks at a low cost and latency. The company claims it's an upgrade from its previous "small models" such as GPT-3.5 Turbo. "GPT-4o mini is paving the way for developers to build and scale powerful AI applications more efficiently and affordably," the company wrote in a blogpost. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

OpenAI in fundraising talks that could value company at $150 billion

The new funding round would be led by investment firm Thrive Capital, which has previously invested in OpenAI. Tech giants Apple, Nvidia and Microsoft have also been part of the discussions, said the people, who spoke on condition of anonymity because of the nature of the discussions.OpenAI is in talks to raise about $6.5 billion as part of a deal that would value the company in the vicinity of $150 billion, a nearly $70 billion increase from its valuation nine months ago, according to five people with knowledge of the conversations. The deal would make the company more valuable than any other private company with the exception of ByteDance, maker video-sharing app TikTok. As recently as last week, OpenAI was looking to raise about $1 billion at a $100 billion valuation. But in the past few days, the company, which has extraordinarily high expenses because of the computing power needed to build big AI systems, has appeared to race past that goal. The new funding round would be led by investment firm Thrive Capital, which has previously invested in OpenAI. Tech giants Apple, Nvidia and Microsoft have also been part of the discussions, said the people, who spoke on condition of anonymity because of the nature of the discussions. Bloomberg reported earlier on the new valuation talks. In late 2022, OpenAI started the artificial intelligence boom with the release of its online chatbot, ChatGPT, inciting a global surge in funding for startups that built similar technology. Interest in such companies dropped this summer as a series of prominent companies all but disappeared into wealthier and more powerful AI companies like Google, Microsoft and Amazon. But OpenAI, backed by $13 billion from Microsoft and with name recognition far beyond its startup rivals, has continued to build on the frenzy of the ChatGPT release. And its new, rapidly expanding investment round is a statement on the urgency the tech industry still places on artificial intelligence. If the new deal is completed, OpenAI will be more valuable than SpaceX, the private rocket company founded by Elon Musk (who was also one of OpenAI's co-founders). It would also be nearly twice as valuable as Intel, the venerable chip giant, whose total market value has slipped to around $83 billion as it has been unable to keep up with the AI boom. Over the past nine months, OpenAI, which has more than 1,700 employees, has added over 1,000 new workers and released increasingly powerful versions of ChatGPT and similar technologies, including systems that generate images and videos. Still, OpenAI has had very public growing pains. Company executives are still trying to repair OpenAI's reputation after four board members unexpectedly fired CEO Sam Altman in late 2023. Since his reinstatement just five days later, the company has lost several high-profile employees, including its chief scientist and co-founder Ilya Sutskever. Sutskever and other experts in the field, including some former and current OpenAI employees, have become increasingly concerned that the kind of technologies developed by OpenAI could help spread disinformation, contribute to cyberattacks or even endanger humanity. OpenAI has repeatedly acknowledged those concerns, and it has worked to revamp its efforts to ensure its technologies are safe. (The New York Times sued OpenAI and Microsoft in December for copyright infringement of news content related to AI systems.) OpenAI is also working to transform its AI technologies into products that pull in revenue. Building this kind of technology requires billions of dollars in raw computing power, and by some estimates the company is burning through $7 billion every year. Now, tech analysts say, OpenAI needs to show that it can be more than a money pit for investors and can operate more like a traditional tech company. OpenAI is pulling in more than $2 billion a year through subscriptions to ChatGPT and other technologies, according to a person familiar with its finances. It has also hired seasoned Silicon Valley executives like Sarah Friar, a former CEO of Square, and Kevin Weil, a former chief product officer of Twitter, to help transform itself from an AI research lab into a profit-producing operation. Altman, who is admired by peers in Silicon Valley for his fundraising ability, has strategically built investor enthusiasm for opportunities to buy stakes in OpenAI. His strategy has been to sell existing shares in a so-called tender offer once a year, which benefits the company's employees, while later complementing that with a traditional funding round to support OpenAI's business, a person familiar with Altman's approach said. Last year, as he wrapped up a tender offer that valued the company at more than $80 billion, he was already telling investors that he planned to raise money to value it at $100 billion. That round continues to expand.

OpenAI in Fund-Raising Talks That Could Value Company at $150 Billion

OpenAI is in talks to raise about $6.5 billion as part of a deal that would value the company in the range of $150 billion, a nearly $70 billion increase from its valuation nine months ago, according to five people with knowledge of the conversations. The deal would make the company more valuable that any other private company with the exception of ByteDance, the maker the video-sharing app TikTok. As recently as last week, OpenAI was looking to raise about $1 billion at a $100 billion valuation. The new funding round would be led by the investment firm Thrive Capital, which has previously invested in OpenAI. The tech giants Apple, Nvidia and Microsoft have also been part of the discussions, said the people, who spoke on the condition of anonymity because of the nature of the discussions. Bloomberg reported earlier on the new valuation talks. In late 2022, OpenAI started the artificial intelligence boom with the release of its online chatbot ChatGPT, inciting a global surge in funding for start-ups that built similar technology. Interest in such companies dropped this summer as a series of prominent companies all but disappeared into wealthier and more powerful A.I. companies like Google, Microsoft and Amazon. OpenAI has also struggled to repair its reputation after four board members unexpectedly fired the chief executive Sam Altman in late 2023. Since his reinstatement just five days after he was forced out, the company has lost several high-profile employees, including the chief scientist and co-founder Ilya Sutskever. In that same period, the company, which has more than 1,700 employees, has added over 1,000 new workers and released increasingly powerful versions of ChatGPT and similar technologies, including systems that generate images and videos. Mr. Altman, who is admired by peers in Silicon Valley for his fund-raising ability, has strategically built investor enthusiasm for opportunities to purchase stakes in OpenAI. His strategy has been to sell existing shares in a so-called tender offer once a year, which benefits the company's employees, while later complementing that with a traditional funding round to support OpenAI's business, a person familiar with Mr. Altman's approach said. Last year, as he wrapped up a tender offer that valued the company at more than $80 billion, he was already telling investors that he planned to raise money to value it at $100 billion. (The New York Times sued OpenAI and Microsoft in December for copyright infringement of news content related to A.I. systems.) This is a developing story. Check back for updates.

OpenAI aims to raise at least $5bn at $150bn valuation

OpenAI is aiming to raise at least $5bn at a valuation of $150bn from investors including Apple, Nvidia, Microsoft and Thrive Capital, in a deal that could almost double the artificial intelligence start-up's valuation. The San Francisco-based group has been in discussions with investors in recent weeks about a new round of financing to fund its ambitious plans to develop AI models capable of outperforming human intelligence and give it an advantage over rivals including Anthropic, Google and Meta. According to deal terms sent to prospective investors and seen by the Financial Times, the company is targeting a valuation of $150bn, a big jump from the $86bn at which it was valued at the start of this year, and is seeking new funds of at least $5bn. The ultimate raise could exceed $6.5bn, according to one investor pitched on the deal. Thrive, a venture capital firm founded by Josh Kushner, is leading the round and expected to invest $1bn, according to people with knowledge of the matter. The total size of the fundraising round could change as prospective backers including Apple, Nvidia and Microsoft -- the three most valuable publicly traded companies in the world -- discuss the size and nature of their involvement with OpenAI. Microsoft has already committed $13bn to the start-up. OpenAI and Thrive declined to comment. The start-up has rapidly expanded since launching its ChatGPT chatbot in 2022, with revenues hitting $2bn on an annual basis at the start of the year, according to people familiar with the matter. But OpenAI remains lossmaking as the costs of developing cutting-edge AI models increases exponentially. It also faces growing competition from rivals. Last week, OpenAI co-founder Ilya Sutskever announced that his three-month-old start-up had raised $1bn at a $5bn valuation, while start-ups Anthropic and Elon Musk's xAI have raised billions of dollars in the past year. A valuation of $150bn would make OpenAI one of the most highly valued start-ups ever, close behind Musk's rocket venture SpaceX. The fundraising round comes amid growing concern about a bubble in the space, with AI model makers coming under pressure from investors to generate returns as the exorbitant costs of building and training models mount. A number of smaller competitors, including Character. AI, Adept and Inflection have been absorbed by Big Tech companies in the past year.

OpenAI in talks to raise funds at $150 bln valuation

A report by Bloomberg says the ChatGPT maker is aiming to get $6.5 billion from investors, and $5 billion more from banks. The deal would reportedly see it valued at $150 billion. That would be up almost three-quarters on the figure earlier in the year. OpenAI didn't respond to a request for comment on the report. But the deal would cement the firm's status as one of the world's most valuable startups. The frenzy sparked by ChatGPT has shaken up the tech sector and global stock markets since it was launched less than two years ago. A fresh capital injection would also allow it to stay private for longer. That is something most hot startups now aim for, avoiding market volatility and the regulatory costs of a public listing. Abundant alternative sources of funding, including private equity, have further dimmed the appeal of share offerings. OpenAI has also been able to rely on strong backing from tech titan Microsoft. Recent reports have claimed Apple and AI chip champion Nvidia could join any new fundraising.

OpenAI in talks to raise funds at $150 billion valuation: Report

AI heavyweight OpenAI is in talks to raise funds at a valuation of $150 billion, Bloomberg News reported on Wednesday, a move that would fortify its status as one of the biggest startups in the world. The maker of viral chatbot ChatGPT is discussing raising $6.5 billion from investors, the report said, citing people familiar with the matter, and another $5 billion in debt from banks in the form of a revolving credit facility. OpenAI's new valuation would be 74% higher than the $86 billion it fetched in a tender offer earlier this year. OpenAI co-founder Ilya Sutskever's new safety-focused AI startup SSI raises $1 billion The company did not immediately respond to Reuters' request for comment, and Thrive Capital, which Bloomberg News earlier said would lead the funding, declined to comment. The frenzy sparked by its ChatGPT has made OpenAI one of the biggest players in the artificial-intelligence industry. The company, led by Sam Altman and backed by technology behemoth Microsoft, has steered a resurgence of Silicon Valley's interest in the space. Forge Global Holdings, a marketplace for private securities, on Wednesday added OpenAI to its list of "Private Magnificent Seven" startups. The Magnificent Seven is a group of publicly traded mega-cap stocks including Microsoft, Apple, Google-parent Alphabet, Tesla and others. OpenAI considers pricier subscriptions to its Chatbot AI: Report The latest capital injection will allow OpenAI to stay private for longer. Most high-flying startups are avoiding going public due to the regulatory costs and the volatility of stock markets. Alternative sources of capital like private equity firms and funds such as Destiny Tech100 and ARK Venture Fund have also dimmed the appeal of initial public offerings. But investors do enjoy the liquidity that public markets offer. "Venture capitalists are going to want some liquidity and the way for them to get that is either the company sells itself or goes public," said Chelsea Childs, partner at law firm Ropes & Gray. Published - September 12, 2024 08:01 am IST Copy link Email Facebook Twitter Telegram LinkedIn WhatsApp Reddit READ LATER Remove SEE ALL PRINT

OpenAI is reportedly raising at a $150 billion valuation -- making it worth more than 88% of Fortune 500 firms

This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in. OpenAI is also looking to raise $5 billion in debt, Bloomberg reported. The new valuation makes the startup one of the most valuable in the world -- and it's a big jump from the company's previous $86 billion valuation. This figure was calculated when the company allowed employees to start selling stakes in the company in February. The funding round will be led by Josh Kushner's Thrive Capital, a New York venture firm known for its early bets on startups including Instagram, Stripe, Robinhood, Spotify, and Slack. Microsoft, which has been a partner since 2019, Apple, and even Nvidia have also been discussing investing in the ChatGPT maker. Even though it's a startup with an unconventional structure -- a nonprofit partnered with a capped profit arm -- OpenAI has already proven to be the leader in AI among a growing field of well-funded competitors looking to capitalize on the technology. In a memo sent to employees last month, OpenAI chief financial officer Sarah Friar wrote the money raised will be used for computing power and other operating costs, Bloomberg reported. The memo also noted that the startup is planning to allow employees to sell some of their shares in a tender offer later this year. A tender offer gives employees of private companies a chance to sell a certain number of shares at a fixed price during a limited time frame. It is especially common for startups like OpenAI that opt to stay private -- so employees can't cash out immediately through an initial public offering. OpenAI joins a handful of other private companies valued much more than most publicly-traded peers. Elon Musk's SpaceX was valued at close to $210 billion in June, after selling its insider shares for $112 in a tender offer. Other large private companies include TikTok parent ByteDance, which was valued at $286 billion at the end of last year, and Stripe, which was valued at $70 billion in July. OpenAI did not immediately respond to a request for comment.

OpenAI reportedly seeking $6.5B investment at $150B valuation - SiliconANGLE

OpenAI is seeking to raise $6.5 billion from investors at a $150 billion pre-money valuation, Bloomberg reported today. The report comes about two weeks after rumors first emerged that the ChatGPT developer is in talks for a new multibillion-dollar funding round. At the time, sources told CNBC that OpenAI was eyeing a valuation of "more than $100 billion" but didn't share a specific number. Until now, there was also no word on the precise sum that the company hopes to raise. But one late August report did specify that Thrive Capital plans to lead the investment with a $1 billion contribution. Earlier this year, the venture capital firm bought shares from existing OpenAI investors at a $86 billion valuation. It's believed that Microsoft is also set to participate in the round. The company has so far provided OpenAI with about $13 billion worth of capital and cloud credits to support its artificial intelligence research. Nvidia Corp. and Apple Inc., which recently inked a product partnership with OpenAI, may participate as well. The steep valuation at which the company is raising capital hints at investor confidence about its next-generation large language model. Reportedly known as Strawberry, the model is expected to become available within two weeks. It's believed to possess more advanced reasoning capabilities than GPT-4o that will make it better at tasks such as solving math problems and generating code. Strawberry reportedly takes significantly longer than other LLMs to answer questions. That suggests it may also require more hardware resources, which could increase OpenAI's inference costs after the model launches. The capital that OpenAI hopes to raise may help it more easily shoulder the additional expenses. After launching Strawberry, OpenAI will presumably move on to developing new, even more capable models. Such future development initiatives would further increase the company's hardware expenses. In an internal note that leaked last month, OpenAI OpenAI Chief Financial Officer Sarah Friar told employees that a part of the new funding will go towards buying compute infrastructure. The memo didn't specify how the company would go about sourcing that infrastructure. In March, The Information reported that OpenAI is working with Microsoft to build a cloud-based AI supercomputer with millions of chips. Alongside the $6.5 billion funding round it's rumored to be raising, OpenAI is reportedly seeking a $5 billion revolving credit facility from banks. According to Bloomberg, several major tech firms secured such credit before going public. In some cases, the financial institutions from which those companies raised the financing went on to underwrite their initial public offerings. It's unclear whether OpenAI has plans for an IPO, which would be one of the few ways its investors could realize a return on their stakes. The company currently has an unusual corporate structure that may complicate a stock market listing. OpenAI launched in 2015 as a nonprofit and later established a for-profit arm, which both leads its AI development efforts and issues shares to investors. Sources told the Financial Times last month that the company is considering changing its corporate structure. OpenAI could reportedly remove caps that currently limit its investors' maximum return. It's unclear if the company is also considering other changes that might simplify its path to an eventual IPO.

OpenAI's Valuation Could Skyrocket To $150B In New Fundraising, Positioning It Among The World's Most Valuable Startups: Report - Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL)

ChatGPT-parent OpenAI is reportedly in discussion to raise $6.5 billion in equity financing, which could bring its valuation to $150 billion. What Happened: The new valuation does not include the funds being raised. The round is expected to be led by Thrive Capital, reported Bloomberg. Other potential investors include Microsoft Corporation MSFT, Apple Inc. AAPL, and Nvidia Corporation NVDA. Still, the valuation is a significant jump from the startup's $86 billion valuation from its tender offer earlier this year. See Also: AI Sector Bubble Concerns, Nvidia's One-Stop Shop Ambition, And More: This Week In AI Microsoft has already invested about $13 billion in OpenAI, over which the tech giant also faced scrutiny from EU's antitrust regulators. OpenAI is also in talks to secure a $5 billion credit line from banks. However, the terms of these discussions could change, the report noted, citing a person familiar with the matter. Last month in an internal memo, OpenAI's CFO, Sarah Friar, said that the latest financing will be focused on supporting computing power and operational expenses. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: Nowadays, OpenAI has been making headlines because of a high-profile copyright lawsuit, where the startup is making efforts to keep its co-founder Ilya Sutskever's files confidential. The development came after lawyers of the Author's Guild said that certain files should be included in the discovery process. On the other hand, Sutskever, who resigned from OpenAI in May 2024, has raised $1 billion for his AI startup, Safe Superintelligence. Meanwhile, earlier this month it was reported that OpenAI CEO Sam Altman has been working on gaining the U.S. government's support for his AI infrastructure project aimed at forming a global coalition to fund rapid AI development. Image via Shutterstock Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Early OpenAI Investor Vinod Khosla Receives Flak After Saying 100% Of AI Unicorns Are Built On ChatGPT-Maker's API: 'It's Like Saying All Electric Cars Are Tesla' Market News and Data brought to you by Benzinga APIs

OpenAI in talks to raise funds at $150 billion valuation, Bloomberg News reports | Mint

(Reuters) -AI heavyweight OpenAI is in talks to raise funds at a valuation of $150 billion, Bloomberg News reported on Wednesday, a move that would fortify its status as one of the biggest startups in the world. The maker of viral chatbot ChatGPT is discussing raising $6.5 billion from investors, the report said, citing people familiar with the matter, and another $5 billion in debt from banks in the form of a revolving credit facility. OpenAI's new valuation would be 74% higher than the $86 billion it fetched in a tender offer earlier this year. The company did not immediately respond to Reuters' request for comment, and Thrive Capital, which Bloomberg News earlier said would lead the funding, declined to comment. The frenzy sparked by its ChatGPT has made OpenAI one of the biggest players in the artificial-intelligence industry. The company, led by Sam Altman and backed by technology behemoth Microsoft, has steered a resurgence of Silicon Valley's interest in the space. Forge Global Holdings, a marketplace for private securities, on Wednesday added OpenAI to its list of "Private Magnificent Seven" startups. The Magnificent Seven is a group of publicly traded mega-cap stocks including Microsoft, Apple, Google-parent Alphabet, Tesla and others. The latest capital injection will allow OpenAI to stay private for longer. Most high-flying startups are avoiding going public due to the regulatory costs and the volatility of stock markets. Alternative sources of capital like private equity firms and funds such as Destiny Tech100 and ARK Venture Fund have also dimmed the appeal of initial public offerings. But investors do enjoy the liquidity that public markets offer. "Venture capitalists are going to want some liquidity and the way for them to get that is either the company sells itself or goes public," said Chelsea Childs, partner at law firm Ropes & Gray. (Reporting by Niket Nishant in Bengaluru; Editing by Shinjini Ganguli)

Report: OpenAI Seeking $150 Billion Valuation in Funding Round | PYMNTS.com

OpenAI reportedly aims to raise $6.5 billion from investors at a valuation of $150 billion. The firm also is seeking to raise $5 billion in debt from banks via a revolving credit facility, Bloomberg reported Wednesday (Sept. 11), citing unnamed sources. The discussions are ongoing, and the terms could change, according to the report. OpenAI did not immediately reply to PYMNTS' request for comment. The financing will be used to cover the company's computing power needs and other operating expenses, per the report. It was reported Aug. 28 that OpenAI aimed to raise "several billion dollars" in a funding round that would result in a valuation above $100 billion. The firm was valued at $86 billion when employees sold shares in late 2023. The latest funding round comes at a time when there is fierce competition in the artificial intelligence space and when staying on the cutting edge of AI will require billions of dollars in spending. OpenAI spent more than $100 billion to build its GPT-4 AI model and is expected to spend more on the one it is developing now. The funding round reportedly is being led by venture capital firm Thrive Capital and is expected to include participation from Microsoft, which has invested $13 billion in OpenAI since 2019. Apple and Nvidia are reportedly in talks to invest in the company as well. OpenAI became the first official partner for Apple Intelligence in June, while Nvidia supplies chips and other infrastructure for AI tools like those developed by OpenAI. In other AI funding moves, a three-month-old artificial intelligence startup co-founded by former OpenAI chief scientist Ilya Sutskever secured $1 billion in a funding round. The startup, Safe Superintelligence (SSI), was launched in June by Sutskever along with Daniel Gross, a former Y Combinator partner who previously led AI efforts at Apple, and Daniel Levy, a former colleague of Sutskever's at OpenAI. SSI is focusing on developing artificial general intelligence (AGI) with an emphasis on safety. AI investments present a lot of opportunities, Carlos Simonsen, co-founder and managing partner of Brazilian venture capital firm Upload Ventures told Bloomberg News in an interview posted Wednesday. "There are a lot of opportunities in AI as a productivity facilitator in several processes in sectors such as banking and health care, but agritechs and credit FinTechs have a lot of risk," Simonsen said.

Breaking: Sam Altman's OpenAI Eyes $150B Valuation With Latest Funding

Microsoft, Nvidia, and Apple in talks to join OpenAI's funding round. Sam Altman's OpenAI is in talks to secure a funding round that could push its valuation to $150 billion. Thrive Capital is expected to lead the investment, while companies like Microsoft and Nvidia are in discussions to participate. This potential deal would significantly boost OpenAI's financial standing, further solidifying its leadership in the artificial intelligence sector. According to a Bloomberg report, OpenAI, led by CEO Sam Altman, is in advanced talks to raise new funds, pushing its valuation to $150 billion. Thrive Capital is expected to lead the round, contributing around $1 billion, while other prominent players like Microsoft and Nvidia are also in discussions. This new funding round would represent a significant leap from OpenAI's prior $86 billion valuation earlier this year. The fundraising discussions come amid growing interest in artificial intelligence, with OpenAI playing a leading role in shaping the industry. The company's ChatGPT product has captivated the public and investors, fueling demand for advanced artificial intelligence solutions across various sectors. If successful, this funding round will further cement OpenAI's dominance in the rapidly evolving artificial intelligence landscape. Thrive Capital, a prior investor in OpenAI, is expected to play a key role in this funding round by committing around $1 billion. The round, which could raise $6.5 billion, has garnered interest from some of the biggest names in the tech industry. While Thrive Capital leads, Microsoft, OpenAI's largest backer, is also expected to contribute, continuing its strong financial support since its $10 billion investment in 2023. In addition to Thrive Capital and Microsoft, Nvidia and Apple have been in talks to participate. Nvidia, a major supplier of artificial intelligence chips, could bring further strategic value to OpenAI as it scales its technology. This broad base of investor interest underscores the market's confidence in OpenAI's future growth and artificial intelligence innovation potential. Concurrently, Sam Altman's OpenAI is reportedly seeking $5 billion in debt financing through a revolving credit facility. Banks are involved in discussions to provide this line of credit, which would give OpenAI more flexibility in managing its operations and expansion. The company has already spent heavily on AI training, infrastructure, and staffing, burning through $8.5 billion so far, making this additional capital crucial. OpenAI's high expenditure reflects the growing costs of staying ahead in the competitive artificial intelligence sector. With Artificial intelligence development becoming more complex and resource-intensive, securing both equity and debt funding will be critical to maintaining OpenAI's growth trajectory. The revolving credit facility will also provide financial breathing room as the company continues to refine its AI models. The potential involvement of Nvidia and Apple highlights the strategic importance of OpenAI's work in artificial intelligence. Nvidia, which dominates the artificial intelligence chip market, could benefit from its collaboration with Sam Altman's OpenAI, especially as global demand for artificial intelligence hardware accelerates. Similarly, Apple's interest signals the broader industry shift toward integrating artificial intelligence into consumer and enterprise products. These developments come at a time when Saudi Arabia has also shown interest in acquiring advanced Nvidia AI chips, positioning itself strategically between the U.S. and China in the race for AI supremacy. This international demand for AI technology further amplifies the global significance of OpenAI's ongoing work. The outcome of this funding round could have ripple effects across the tech sector, shaping Artificial intelligence development in the coming years.

OpenAI may soon be worth more than Goldman Sachs - Times of India

OpenAI, the maker of ChatGPT, is reportedly in discussions to raise $6.5 billion at a staggering $150 billion valuation, sources familiar with the matter told the Bloomberg. This valuation would make OpenAI worth more than 88% of Fortune 500 companies, surpassing established giants like Goldman Sachs, Uber, and BlackRock. The funding round is expected to be led by Josh Kushner's Thrive Capital, with potential participation from tech heavyweights Microsoft, Apple, and Nvidia.OpenAI is also seeking to secure an additional $5 billion in debt financing from banks. This new valuation represents a significant jump from OpenAI's previous $86 billion valuation earlier this year. The rapid increase highlights the growing investor enthusiasm for AI technology and OpenAI's position as a leader in the field. The funds raised will primarily be used for computing power and other operating expenses, according to an internal memo from OpenAI's CFO Sarah Friar. The company also plans to offer employees an opportunity to sell some of their shares in a tender offer later this year. OpenAI's unconventional structure as a nonprofit partnered with a capped-profit arm has not deterred investors. The company has emerged as a frontrunner in the AI race, despite growing competition from well-funded rivals. If successful, this funding round would cement OpenAI's status as one of the most valuable private companies globally, joining the ranks of SpaceX and ByteDance. As negotiations continue, the terms of the deal may change. OpenAI has not yet responded to requests for comment on the reported funding round. 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.

8 things you should know to understand OpenAI's $150 billion valuation goal

OpenAI is seeking to raise at least $5 billion, aiming for a valuation of $150 billion, nearly doubling its previous valuation of $86 billion. The funding round includes major investors such as Apple, Nvidia, Microsoft, and Thrive Capital. Thrive Capital, led by Josh Kushner, is expected to contribute $1 billion. OpenAI, the company behind popular AI tools like ChatGPT, is aiming for a huge milestone: a $150 billion valuation. Here's what this goal means and why it's such a big deal: If OpenAI reaches its $150 billion goal, it could set a new standard for how much AI companies are worth. This could influence how other tech start-ups are valued. Successfully hitting this target could give OpenAI more resources to push the boundaries of AI technology, potentially leading to major advancements that impact various industries. So, can OpenAI hit the jackpot with its $150 billion goal? It's a bold move that reflects both high expectations and big potential in the world of artificial intelligence.

OpenAI reportedly in talks to raise at $150B valuation | TechCrunch

OpenAI is reportedly in talks with investors to raise $6.5 billion in new funding, valuing the startup at $150 billion, according to Bloomberg and the Financial Times. That's significantly higher than OpenAI's previously reported valuation from earlier this year, $86 billion, and far higher than any other AI startup today. The funding round will reportedly be led by Thrive Capital, a major investor of OpenAI in previous rounds. Other reported investors include Microsoft, Apple, and Nvidia; OpenAI partners that are all invested in the success of the AI startup, in one way or another. Bloomberg also reports that OpenAI is in talks to raise $5 billion in debt from a few banks. In August, the Wall Street Journal reported Thrive was leading a massive funding round for OpenAI, planning to contribute roughly $1 billion. However, the Journal reported OpenAI's valuation for this round at around $100 billion.

OpenAI reportedly in talks for $6.5B funding at a $150B valuation (NASDAQ:MSFT)

Microsoft-backed OpenAI is in discussions for a $6.5 billion funding round from investors, at a valuation of $150 billion for the world's biggest artificial intelligence startup, Bloomberg reported on Wednesday citing people familiar with the situation. Additionally, the startup is also in talks with banks for a $5 billion revolving credit facility, the Bloomberg report said citing one person with the knowledge of the private information. The people familiar with the deal noted that the discussions are still ongoing and the numbers could change, the report said. If true, the new valuation is nearly double the $86 billion market cap figure it received earlier this year, making it possibly the biggest startup in the world. The funding round is set to be led by Thrive Capital, and Microsoft is also expected to participate, the report said. Apple and Nvidia have been in talks about investing in the startup.