OpenAI Secures $10 Billion in Funding, Fueling AI Ambitions Amid Financial Challenges

OpenAI Secures $10B in One Week -- But It's Also Burning Cash at Record Speed

A day after announcing a $6.6 billion venture round, OpenAI secured a $4 billion credit line from banks. Fresh off a giant funding round that valued OpenAI at $157 billion, the ChatGPT maker has secured even more financial backing through a credit facility with a trove of financial institutions, many of which are also its clients. The Sam Altman-led company announced yesterday (Oct. 3) that it has set up a $4 billion credit line from the likes of JPMorgan Chase (JPM), Citi, Goldman Sachs (GS), Morgan Stanley (MS), Santander, Wells Fargo (WFC), SMBC, UBS and HSBC. Sign Up For Our Daily Newsletter Sign Up Thank you for signing up! By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters "We are proud to have the strongest banks and investors in the world supporting us," said Sarah Friar, OpenAI's chief financial officer, in a statement. "This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities." The arrangement of the credit line also includes the ability to increase it by $2 billion, according to CNBC. Combined with OpenAI's recent $6.6 billion in funding, OpenAI now has access to more than $10 billion in liquidity and "the flexibility to invest in new initiatives and operate with full agility as we scale," said OpenAI in a press release. OpenAI is now flush with cash, but it's also burning money at an alarming rate. Despite skyrocketing revenue (annual revenue is expected to triple from this year's $3.7 billion to $11.6 billion next year), the company is on track to lose $5 billion this year. The most significant costs come from its use of Microsoft (MSFT)'s cloud computing platform to run its products. Banks are embracing generative A.I. OpenAI's arrangement with nine major financial institutions also signifies growing ties between banks and generative A.I. Despite the fact that 30 percent of banks around the globe banned the use of A.I. internally as of March, financial institutions have gradually begun to embrace the new technology. Goldman Sachs, for example, which banned the use of ChatGPT last year, has since begun experimenting with A.I. tools that can aid developers and help summarize and draft documents. Some of the banks involved in OpenAI's credit line are clients of the ChatGPT-maker itself. The credit facility "reaffirms our partnership with an exceptional group of financial institutions, many of whom are also OpenAI customers," said the A.I. company. Santander has previously revealed that it is testing out uses of ChatGPT, while Morgan Stanley in June rolled out a new A.I. assistant powered by OpenAI's GPT-4 model to help nearly 16,000 financial advisors take notes in client meetings and draft emails. JPMorgan Chase, too, has used OpenAI's products, having introduced an A.I. assistant in August with the help of an OpenAI model in a bid to enhance the productivity of more than 60,000 employee.

OpenAI says it now has $10 billion in cash to burn

On the heels of a $6.6 billion funding round, OpenAI has secured access to billions more from some of the biggest global banks. The ChatGPT-maker said in a blog post Thursday that it has secured a $4 billion credit facility with JPMorgan Chase (JPM), Citi (C), Goldman Sachs (GS), Morgan Stanley (MS), Santander (SAN), Wells Fargo (WFC), SMBC (SMFG), UBS (UBS), and HSBC (HSBC). That gives the startup, which is now valued at about $157 billion, access to $10 billion in liquidity, which will allow it to invest in new initiatives and continue to scale its business, the company said. "This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities," said Sarah Friar, OpenAI's chief financial officer. "We are proud to have the strongest banks and investors in the world supporting us." Credit facilities are a type of loan agreement that allow borrowers to borrow money without having to reapply for a new loan each time. The new funding comes amid a spate of executive resignations and reports that OpenAI is spending more than it's making. The company is also reportedly considering restructuring its nonprofit status to attract investors. Chief executive Sam Altman reportedly has assured employees, however, that he doesn't plan to get a "giant equity stake" in the company. OpenAI holds the spot of the third-most valuable private company in the world, behind only TikTok parent ByteDance and Elon Musk's SpaceX, according to market research firm CB Insights. A deal allowing employees to sell stakes in the company late last year valued OpenAI at $86 billion. The startup has partnered with a number of the same banks that are providing it with credit facilities to help introduce its Large Language Models (LLM) into their firms. Morgan Stanley, which was OpenAI's first official wealth management partner, in July began rolling out a genAI assistant, Debrief, built on GPT-4. JPMorgan also introduced a new AI assistant powered by OpenAI in August, which is designed to help employees with daily tasks, including drafting emails and reports. Goldman Sachs' generative AI platform also uses OpenAI's GPT-3.5 and GPT-4 models -- and others -- to support the work of its developers. ChatGPT already has 250 million weekly users, and has driven hype around AI chatbots since its release in November 2022. But its ambitions go farther than gen AI. Ultimately, OpenAI is hoping to reach what's known as artificial general intelligence, or AGI -- a futuristic view of machines that can pretty much do anything just as well as humans. In July, the company shared a five-level system it developed to track its progress with employees, with a spokesperson reportedly telling Bloomberg it was already at level two, "Reasoners." At that threshold, AI can perform basic problem-solving and is on the level of a human with a doctorate degree but no access to tools.

OpenAI can't get enough: Lands another $4B in funding

OpenAI has secured a fresh $4 billion revolving line of credit, just one day after announcing a record-breaking $6.6 billion funding round. This massive financial injection now arms OpenAI with over $10 billion in liquidity, allowing the company to push its ambitious AI projects forward without the typical financial constraints. The newly secured credit facility, underpinned by a roster of financial heavyweights including JPMorgan Chase, Citi, Goldman Sachs, and others, offers flexibility for OpenAI to keep its operations running smoothly -- particularly given the high costs associated with powering AI tools like ChatGPT. This capital doubled OpenAI's valuation from $86 billion and also placed the company shoulder-to-shoulder with some of the world's largest publicly traded companies. However, this new chapter in OpenAI's journey isn't without its complexities. Alongside the influx of capital, the company faces a critical transformation -- moving away from its nonprofit origins towards a fully for-profit model. The decision to go this route is fueled by the need to secure continued investment in the race toward AGI. As OpenAI grows increasingly commercial, friction is emerging among its leadership, with debates over whether this transition dilutes its original mission of advancing AI for public benefit. With ChatGPT generating substantial revenue streams from both consumer and enterprise markets, the company is finding itself at the intersection of profit and purpose. OpenAI's new $4 billion revolving credit line fortifies its financial foundation, offering significant strategic breathing room. As CFO Sarah Friar explained, this credit facility strengthens their balance sheet, granting the company the agility to seize emerging opportunities as they scale. Notably, these funds remain untapped as of now, acting as a powerful reserve for OpenAI's future ambitions. This surplus of capital gives the company a clear runway to explore groundbreaking initiatives, further expand its infrastructure, and attract world-class talent. According to OpenAI's latest blog post, this new credit line both expands the company's liquidity. However, it also deepens partnerships with top-tier financial institutions, many of whom are already customers of OpenAI. With over $10 billion in accessible funds, OpenAI now finds itself equipped to take bolder strides into the future, whether that means doubling down on cutting-edge research, scaling up to meet the ever-growing demand for its AI services, or investing in the next wave of AI-driven innovations.

OpenAI can't get enough: Lands another $4B in credit

OpenAI has secured a fresh $4 billion revolving line of credit, just one day after announcing a record-breaking $6.6 billion funding round. This massive financial injection now arms OpenAI with over $10 billion in liquidity, allowing the company to push its ambitious AI projects forward without the typical financial constraints. The newly secured credit facility, underpinned by a roster of financial heavyweights including JPMorgan Chase, Citi, Goldman Sachs, and others, offers flexibility for OpenAI to keep its operations running smoothly -- particularly given the high costs associated with powering AI tools like ChatGPT. This capital doubled OpenAI's valuation from $86 billion and also placed the company shoulder-to-shoulder with some of the world's largest publicly traded companies. However, this new chapter in OpenAI's journey isn't without its complexities. Alongside the influx of capital, the company faces a critical transformation -- moving away from its nonprofit origins towards a fully for-profit model. The decision to go this route is fueled by the need to secure continued investment in the race toward AGI. As OpenAI grows increasingly commercial, friction is emerging among its leadership, with debates over whether this transition dilutes its original mission of advancing AI for public benefit. With ChatGPT generating substantial revenue streams from both consumer and enterprise markets, the company is finding itself at the intersection of profit and purpose. OpenAI's new $4 billion revolving credit line fortifies its financial foundation, offering significant strategic breathing room. As CFO Sarah Friar explained, this credit facility strengthens their balance sheet, granting the company the agility to seize emerging opportunities as they scale. Notably, these funds remain untapped as of now, acting as a powerful reserve for OpenAI's future ambitions. This surplus of capital gives the company a clear runway to explore groundbreaking initiatives, further expand its infrastructure, and attract world-class talent. According to OpenAI's latest blog post, this new credit line both expands the company's liquidity. However, it also deepens partnerships with top-tier financial institutions, many of whom are already customers of OpenAI. With over $10 billion in accessible funds, OpenAI now finds itself equipped to take bolder strides into the future, whether that means doubling down on cutting-edge research, scaling up to meet the ever-growing demand for its AI services, or investing in the next wave of AI-driven innovations.

OpenAI Adds $4 Billion Credit Line on Top of $6.6 Billion Investment Round

Michael J. de la Merced reported from London, and Mike Isaac from San Francisco. OpenAI has set up a $4 billion credit line from an array of banks, adding to its financial firepower after securing a $6.6 billion round of new investments, the company said on Thursday. The debt financing underscores OpenAI's ability to tap some of the world's biggest institutions for increasingly huge sums of money -- and the ChatGPT creator's ever-growing need for more capital. Just one day earlier, OpenAI announced that it had secured a new round of equity investments that values the artificial intelligence company at $157 billion, making it one of the most valuable privately held start-ups. Among those putting in money are the investment firm Thrive Capital, Microsoft, Nvidia and SoftBank. In a blog post on Thursday, OpenAI said it had also set up a revolving line of credit with JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, the Japanese bank SMBC, UBS and HSBC. Fast-growing venture-backed companies often seek out such credit lines -- effectively a corporate equivalent to a credit card -- to add to their financial resources without having to give up more equity. Companies can borrow up to a certain limit, and the credit line is restored when existing borrowing is paid back. The continued fund-raising signals the enormous amounts of money required to run OpenAI's services, which rely on expensive computing power from companies like Microsoft to power their products. ChatGPT, the marquee A.I. chatbot product from OpenAI, sends millions of queries per day back to the cloud servers that power the technology. Those cloud services are in high demand as more companies push further into artificial intelligence, driving up costs for everyone. "This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities," Sarah Friar, OpenAI's chief financial officer, said in a statement. An OpenAI spokeswoman did not provide further comment beyond the blog post. Credit lines like this provide banks with an opportunity to deepen their relationships with desirable clients, especially those that may eventually pursue big-ticket deals such as acquisitions or initial public offerings. (In 2011, Facebook secured a $1.5 billion revolving credit line from several banks, which ended up becoming underwriters for its initial offering the next year.) OpenAI's popularity has grown immensely in the past year, with more than 350 million people using its services each month, according to internal documents viewed by The New York Times. That is more than triple the number just six months ago. But OpenAI's costs have also soared. The company is on track to lose at least $5 billion in 2024, the documents said, and does not anticipate its costs to come down any time soon. The company estimates it will lose more than $11 billion in 2025, the documents said. (The Times sued OpenAI and Microsoft in December for copyright infringement of news content related to A.I. systems.)

OpenAI secures $4bn in revolving credit from nine major banks

While $4bn is the base credit line, the ChatGPT maker has the option to increase it by an additional $2bn. OpenAI has secured $4bn in revolving credit, just after it closed a funding round raising $6.6bn in investments. Now, the start-up behind ChatGPT has liquid assets worth more than $10bn, giving it flexibility to invest in computing technology and scale up its business, the company said in a statement yesterday (3 October). The revolving credit, which can be used over the course of three years, was secured from JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS and HSBC. And while the $4bn is the base credit line, the start-up also can increase it by an additional $2bn, according to CNBC. "This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities," said Sarah Friar, OpenAI's chief financial officer. "We are proud to have the strongest banks and investors in the world supporting us." Earlier this week, OpenAI announced the closure of its latest funding round with a raise of $6.6bn, reaching a staggering valuation of $157bn - almost double its previous valuation of $80bn in February of this year. The funding round was led by venture capital firm Thrive Capital and included big name investors Nvidia, SoftBank, Fidelity, Khosla Ventures and the start-up's biggest supporter since 2019, Microsoft. Thrive Capital, which injected $1.2bn, also agreed to invest an additional $1bn if the company hits a revenue goal. Funding into OpenAI has come in the form of convertible notes, with a conversion into equity depending on the successful structural change of the company - from a not-for-profit to a for-profit, a structural change the start-up announced just days prior to the funding round closing. The change would also give the company CEO Sam Altman equity for the first time. However, the company's chief technology officer Mira Murati, research VP Barret Zoph and chief research officer Bob McGrew all announced their departures from OpenAI the day the start-up announced massive the structural changes, adding to a long list of high-profile departures from the AI giant. 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 gets $4 billion revolving credit line, giving it more than $10 billion in liquidity

OpenAI has a $4 billion revolving line of credit, bringing its total liquidity to more than $10 billion, CNBC has learned. It follows news on Wednesday that OpenAI closed its recent funding round at a valuation of $157 billion, including the $6.6 billion the company raised from an extensive roster of investment firms and big tech companies. JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS, and HSBC all participated. The base credit line is $4 billion, with an option to increase it by an additional $2 billion. The loan is unsecured and can be tapped over the course of three years. OpenAI's interest rate is equal to the Secured Overnight Financing Rate (SOFR) plus 100 basis points. SOFR, a measure of the cost of borrowing cash overnight, sat at just over 5% as of early this week, meaning OpenAI would be paying roughly 6% on money that it borrows right away. "This means we now have access to over $10 billion in liquidity, which gives us the flexibility to invest in new initiatives and operate with full agility as we scale," OpenAI wrote in a Thursday blog post, adding that the company plans to use the money to invest in research and products, expand infrastructure and attract talent. "It also reaffirms our partnership with an exceptional group of financial institutions, many of whom are also OpenAI customers." OpenAI's latest funding round included an extensive roster of investment firms and big tech companies. Led by Thrive Capital, which planned to invest $1 billion, investors included existing backer Microsoft as well as chipmaker Nvidia. SoftBank, Khosla Ventures, Altimeter Capital, Fidelity Management & Research Company, MGX and Tiger Global also participated, according to sources familiar with the situation. OpenAI's rapid ascent, which began with the launch of ChatGPT in late 2022, has been the biggest story in the tech industry over the last couple years, bringing the concept of generative artificial intelligence into the mainstream and paving the way for tens of billions of dollars of investments in AI infrastructure. Earlier this year, OpenAI was valued at a reported $80 billion, up from $29 billion in 2023. OpenAI generated $300 million in revenue last month, up 1,700% since the beginning of last year, CNBC confirmed last week, following reporting by The New York Times. The company expects to bring in $11.6 billion in sales next year, up from $3.7 billion in 2024, according to a person close to OpenAI who asked not to be named because the financials are confidential. But all that revenue is extremely costly, as OpenAI has to ramp up purchases of Nvidia's graphics processing units (GPUs) to train and run its large language models. The company expects to lose about $5 billion this year, the person said. Microsoft has invested billions of dollars in OpenAI and is a key partner as the software giant bolsters its Azure cloud business. OpenAI has also experienced plenty of growing pains in recent months, including the loss of key executives, a trend that continued through last week with the departures of CTO Mira Murati, research chief Bob McGrew and research VP Barret Zoph. OpenAI held an all-hands meeting last Thursday following the board's decision to consider restructuring the company to a for-profit business, according to a person with knowledge of the matter, who said that should the change occur, the nonprofit segment would remain as a separate entity. At that meeting, Altman denied reports of plans for him to receive a "giant equity stake" in the company, calling that information "just not true," according to a person who was in attendance. OpenAI Chairman Bret Taylor told CNBC in a statement last week that while the board has talked about the matter, no specific figures are on the table. "The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made," Taylor said.

OpenAI Liquidity Reaches $10 Billion With New Credit Facility | PYMNTS.com

One day after securing $6.6 billion in new funding from an array of tech giants and venture capitalists, the artificial intelligence (AI) startup revealed it had established a $4 billion credit facility with nine of the world's largest banks. The revolving credit facility -- with JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS and HSBC -- will be undrawn at closing, OpenAI said on its blog Thursday (Oct. 3). "This means we now have access to over $10 billion in liquidity, which gives us the flexibility to invest in new initiatives and operate with full agility as we scale," the company said. "It also reaffirms our partnership with an exceptional group of financial institutions, many of whom are also OpenAI customers." OpenAI announced Wednesday (Oct. 2) that it had raised $6.6 billion in new funding, bringing its valuation to $157 billion, a number that places the company in the same market capitalization territory of the likes of Uber, AT&T and Goldman Sachs. OpenAI was last valued at $86 billion early in the year after its employees sold their shares. The new round was led by venture capital firm Thrive Capital, which invested $1.25 billion, sources told The Wall Street Journal (WSJ). Longtime OpenAI partner-investor Microsoft contributed a little under $1 billion, while SoftBank invested roughly $500 million, and AI chipmaker Nvidia, which invested around $100 million, one of the sources said. Sources also told WSJ that investors who wanted to take a look at OpenAI's financial documents were required to kick in at least $250 million. "The AI gold rush is in full swing as investors bet big on the transformative potential of artificial general intelligence (AGI)," PYMNTS wrote Wednesday, as two other companies -- Poolside and HPC-AI Tech -- announced funding rounds of their own. The investment in OpenAI, that report added, "comes amid competition in the AI sector, with tech giants and startups vying for dominance in what many consider the next frontier of technological advancement. OpenAI's valuation reflects growing investor confidence in AGI's potential to revolutionize industries and create new economic opportunities." Examining OpenAI's transformation from nonprofit to for-profit last week, PYMNTS argued that the pivot is reconfiguring the AI world and bringing up questions about the future of innovation for the technology, and about market competition and tech sector partnerships. "The potential shift comes at a crucial time when AI technology is becoming integrated into consumer products and enterprise solutions," PYMNTS wrote. "OpenAI's new business approach will likely have significant implications for its relationships with key stakeholders, notably Apple and Microsoft, while also affecting its standing among potential rivals."

OpenAI secures record-breaking $6.6 billion in funding, now valued at $157 billion

Why it matters: We knew OpenAI was hot, but maybe not this hot. The company has just raised a startling $6.6 billion, leading to a valuation of $157 billion. Even by Silicon Valley standards this is a lot of money. OpenAI is close-lipped about how it will invest the capital, only saying it will accelerate AI research and increase its compute capabilities. In a landmark deal, OpenAI has raised $6.6 billion in new funding, sending its valuation soaring to an astounding $157 billion. This investment round is one of the largest ever in private markets and confirms OpenAI's position as a frontrunner in the AI race. Thrive Capital, led by Josh Kushner, spearheaded the funding round with a $1.3 billion investment. Microsoft, OpenAI's primary backer, contributed an additional $750 million, a source told Bloomberg, bringing Redmond's total investment to nearly $14 billion. Other investors included Nvidia, Khosla Ventures, Fidelity Management & Research Co., Tiger Global Management, Altimeter Capital, Coatue Management and venture firm Quiet Capital. The funding round also attracted global interest, with Japan's SoftBank Group and Abu Dhabi-based MGX joining the roster of investors, people familiar with the matter told Bloomberg. SoftBank's investment came to $500 million, according to one of the sources. The funding has made OpenAI one of the three largest venture-backed startups, alongside Elon Musk's SpaceX and TikTok owner ByteDance. The money raised is a stunning amount, even by Silicon Valley standards. "People are shocked at 150 billion bucks," Altimeter CEO Brad Gerstner said at the Madrona IA Summit in Seattle earlier this week. Altimeter invested at least $250 million, according to the report. Gerstner also pointed to reports that OpenAI expects to generate more than $10 billion in revenue next year and noted that a multiple of 10 times projected revenue isn't unduly high for a company about to go public. OpenAI plans to use this capital infusion to accelerate AI research and expand its computing capacity. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," the company said when it announced the transaction. OpenAI's meteoric rise began with the launch of ChatGPT in 2022, which sparked a global fascination with AI's capabilities. Today, ChatGPT has 250 million weekly active users, with its premium service, ChatGPT Plus, attracting 11 million paying subscribers. OpenAI's business-focused offerings have also gained traction, serving over 1 million people. Its services have become so popular that the company is considering increasing its premium subscription, which currently costs $20 per month, to $2,000, though it's unclear whether this would apply monthly, annually, or represent an entirely new tier. Despite its success, OpenAI has faced challenges, including a brief leadership crisis in November 2023 when CEO Sam Altman was fired and quickly rehired. The company has since undergone significant changes, including board restructuring and the departure of key personnel such as co-founder Ilya Sutskever and CTO Mira Murati. Now, OpenAI is considering transitioning from its current nonprofit structure to a for-profit model, a move likely designed to address investor concerns but could potentially raise legal issues. This shift may include granting Altman a substantial equity stake in the company. Meanwhile, the AI landscape continues to evolve rapidly, with new competitors emerging - including some founded by former OpenAI employees, such as Anthropic and Safe Superintelligence - and established tech giants like Google and Amazon investing heavily in their own AI initiatives. In response, OpenAI has reportedly discouraged investors from backing these rival companies.

OpenAI gets $6.6 billion in new funding, valuing company at $157 billion

The artificial intelligence company needs to raise unprecedented sums to fund its insatiable need for chips and energy. OpenAI has finalized a $6.6 billion funding round from investors who valued the company at $157 billion -- the latest in a series of dramatic and sometimes polarizing moves for the ChatGPT maker. The deal anoints the artificial intelligence company as one of the most highly valued start-ups of all time, suggesting its backers expect OpenAI's chatbot to become much more widely used and to haul in huge profits. Yet the new financing comes on the heels of the surprise resignation of OpenAI's chief technology officer, Mira Murati, who had led work on the company's products, the latest in a string of executive departures from a company that has struggled with internal tensions over safety and the leadership of CEO Sam Altman. OpenAI's new investors include chipmaker Nvidia, MGX, a new technology investment company from the United Arab Emirates, and SoftBank, the Japanese firm known for funneling exorbitant sums into WeWork and Uber as their valuations ballooned before later contracting. Existing investors also participated, including Microsoft and New York investment firms Tiger Global Management and Thrive Capital, which led the round. OpenAI was founded in 2015 as a nonprofit dedicated to inventing superintelligent AI that would benefit all humanity. But it set up a commercial division in 2019 and took investment from Microsoft and others, saying it was the only way to secure the resources needed to fuel AI's insatiable need for semiconductor chips and the energy to power data centers. The company has raised multiple rounds of funding since it launched ChatGPT in late 2022 -- including billions from Microsoft, which became a key partner -- as a way to offer employees and early investors a chance to cash out by selling their shares, and as a means of bringing in fresh capital. OpenAI's new funding marks a new phase for the San Francisco-based artificial intelligence, which initially positioned itself as a counterweight against the dangers of leaving superintelligent AI in the hands of a single company or oppressive foreign government. The commercial race to dominate generative AI, set in motion by OpenAI's decision to release ChatGPT, has in the view of critics and some early employees increasingly crowded out debate around corporate concentration of power or investment from authoritarian regimes. This is a developing story and will be updated.

OpenAI closes funding at $157 billion valuation, as Microsoft, Nvidia, SoftBank join round

OpenAI CEO Sam Altman speaks during the Microsoft Build conference at Microsoft headquarters in Redmond, Washington, on May 21, 2024. OpenAI has closed its long-awaited funding round at a valuation of $157 billion, including the $6.6 billion the company raised from an extensive roster of investment firms and big tech companies. While OpenAI didn't name the investors in Wednesday's press release, a person with knowledge of the matter said the round was led by Thrive Capital and included participation from existing backer Microsoft as well as chipmaker Nvidia, SoftBank and others. Thrive planned to invest $1 billion in the round, CNBC previously reported. OpenAI's rapid ascent, which began with the launch of ChatGPT in late 2022, has been the biggest story in the tech industry over the last couple years, bringing the concept of generative artificial intelligence into the mainstream and paving the way for tens of billions of dollars of investments in AI infrastructure. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," OpenAI wrote in a blog post Wednesday. OpenAI generated $300 million in revenue last month, up 1,700% since the beginning of last year, CNBC confirmed last week, following reporting by the New York Times. The company expects to bring in $11.6 billion in sales next year, up from $3.7 billion in 2024, according to a person close to OpenAI who asked not to be named because the financials are confidential. But all that revenue is extremely costly, as OpenAI has to ramp up purchases of Nvidia's graphics processing units (GPUs) to train and run its large language models. The company expects to lose about $5 billion this year, the person said. Microsoft has invested billions of dollars in OpenAI and is a key partner as the software giant bolsters its Azure cloud business. Earlier this year, OpenAI was valued at a reported $80 billion, up from $29 billion in 2023. Following the viral growth of ChatGPT, momentum has continued with new products for businesses and an expansion into AI-generated photos and videos. OpenAI now has 250 million weekly active users on ChatGPT, CFO Sarah Friar told CNBC in a statement. There are also 11 million ChatGPT Plus subscribers and 1 million paying business users on ChatGPT, a person close to the company said. "AI is already personalizing learning, accelerating healthcare breakthroughs, and driving productivity," Friar said in the statement. "And this is just the start." OpenAI is experiencing plenty of growing pains along the way, including the loss of key executives, a trend that continued through last week. Last Wednesday, OpenAI Chief Technology Officer Mira Murati, who briefly served as interim CEO, said she would be leaving after six and a half years. Shortly after that, research chief Bob McGrew and Barret Zoph, a research vice president, said they were leaving the company. In an interview the next day at Italian Tech Week, OpenAI CEO Sam Altman said, "I think this will be hopefully a great transition for everyone involved and I hope OpenAI will be stronger for it, as we are for all of our transitions." Also on Thursday, OpenAI held an all-hands meeting, following the board's decision to consider restructuring the company to a for-profit business, according to a separate person with knowledge of the matter. Altman said the departures were not related to the potential restructuring, contrary to some media reports. Should the change occur, the nonprofit segment would remain as a separate entity, the source said. At Thursday's meeting, Altman denied reports of plans for him to receive a "giant equity stake" in the company, calling that information "just not true," according to a person who was in attendance. OpenAI Chairman Bret Taylor told CNBC in a statement last week that while the board has talked about the matter, no specific figures are on the table. "The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made," Taylor said. The latest funding round also included participation from Khosla Ventures, Altimeter Capital, Fidelity, MGX and Tiger Global, sources told CNBC.

OpenAI raises $6.6B and is now valued at $157B | TechCrunch

ChatGPT maker OpenAI has closed the largest VC round of all time. The startup today announced that it raised $6.6 billion in a funding round that values OpenAI at $157 billion pre-money. Led by previous investor Thrive Capital, the new cash brings OpenAI's total raised to $17.8 billion or so, per Crunchbase. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," the company wrote in a blog post. "We're grateful to our investors for their trust in us, and we look forward to working with our partners, developers, and the broader community to shape an AI-powered ecosystem and future that benefits everyone." OpenAI was already the world's best-funded AI startup. But the mammoth new tranche puts the San Francisco company in a category all its own. Elon Musk's AI startup, xAI, raised over $6 billion earlier this year, but at a valuation dwarfed by OpenAI's ($24 billion post-money). Chief OpenAI rival Anthropic has raised just over half OpenAI's total ($9.7 billion) since its founding, while high-profile AI ventures Cohere and Mistral's capital war chests are hovering around $1 billion. So why did OpenAI need to raise more cash than the government of Zimbabwe spent in 2021? Well, quite simply, to sustain its sprawling operations. OpenAI is reportedly burning through billions training and productizing its AI systems -- systems like the recently debuted o1 -- and recruiting coveted data science talent to stay apace with the competition. According to The Information, OpenAI has spent roughly $7 billion on model training and $1.5 billion on staffing. (OpenAI CEO Sam Altman has said that one of the company's flagship models, GPT-4, cost more than $100 million to train.) And at one point in time, ChatGPT alone was said to be costing OpenAI $700,000 a day to run. OpenAI is far and away the market leader in generative AI. ChatGPT has more than 250 million weekly active users (around 10 million of which are paying subscribers), and OpenAI's annualized revenue has reportedly eclipsed $3.4 billion. ChatGPT alone could bring in $2.7 billion this year, The New York Times reports, citing internal OpenAI docs. Microsoft, OpenAI's close partner and investor (it's put in over $13 billion), has built an entire suite of productivity products on top of OpenAI models. And Apple is integrating ChatGPT with its Apple Intelligence collection of AI tech. OpenAI optimistically projects its revenue will reach $100 billion in 2029 -- matching the current annual sales of Nestlé. But it faces competition on many fronts. Startups like Runway and Luma Labs have beat OpenAI to market with high-fidelity video generation models. (OpenAI's own video model, Sora, is expected to launch sometime this fall.) Anthropic continues to build out an AI product suite to rival ChatGPT. xAI, Google and Amazon are investing heavily in infrastructure to train powerful next-generation models, and Meta -- along with upstarts such as Black Forest Labs -- continue to release open models on their quest to commoditize text- and image-generating AI. The competitive pressures are such that OpenAI may steeply increase the price of its premium ChatGPT plan, ChatGPT Plus, from $20 per month to $44 per month by 2029 -- and revamp its corporate structure to attract additional investments. The for-profit division of OpenAI is currently governed by a nonprofit that caps investors' returns. But Altman is said to have signaled that OpenAI will move away from nonprofit governance in the next few months. Reuters reported earlier that the close of the $6.6 billion round was contingent on this, in fact -- and Altman possibly receiving equity. According to Bloomberg, investors in the new round will be able to claw back their cash if OpenAI doesn't complete the conversion from nonprofit to for-profit within two years. Unfettering its ability to raise could give OpenAI greater freedom to explore capital-intensive, longer-term bets, like AI chips -- and entire datacenters -- to lessen its reliance on Nvidia. (Nvidia makes the hardware on which OpenAI trains and runs many of its models.) It'll also refill the company's coffers to ink licensing agreements with data providers such as Reddit and Condé Nast -- agreements that could give OpenAI a competitive edge while at the same time shielding it from IP lawsuits. Whether it'll be able to execute is another question. OpenAI's been shedding high-profile execs in recent weeks, the culmination of disagreements over the company's direction. CTO Mira Murati, chief research officer Bob McGrew, and research VP Barret Zoph announced their resignations in late September. Prominent research scientist Andrej Karpathy left OpenAI in February, Sutskever and former safety leader Jan Leike announced their departures in May, and co-founder John Schulman said last month that he was leaving to join rival Anthropic. Meanwhile, Greg Brockman, OpenAI's president, is on extended leave through the end of the year. Of the 13 people who helped found OpenAI in 2015, only three remain.

OpenAI funding round values company at $157 billion

Investors are billion-dollar bullish on OpenAI. Credit: David Paul Morris / Bloomberg / Getty Images Leadership turmoil, rumblings about an AI bubble, and a failed CEO coup last year didn't stop OpenAI from raising $6.6 billion. On Wednesday, OpenAI completed its latest funding round according to the New York Times, giving it a valuation of $157 billion. That makes it the largest VC round of all time, a distinction that was previously held by Elon Musk's xAI, which raised $6 billion earlier this year. The investment was led by VC firm Thrive Capital and included Microsoft, NVIDIA, Japanese tech investment company SoftBank, and United Arab Emirates investment company MGX. As confirmed in previous reports, Apple, which was rumored have backed out of investment talks with OpenAI is not an investor. OpenAI's massive funding round caps off a raucous period of events over the past year or so. After it ignited the generative AI boom in 2022 with the launch of ChatGPT, OpenAI quickly became the latest Silicon Valley darling, earning $13 billion in investment from Microsoft. Then last November, a failed attempt by its non-profit board to oust CEO Sam Altman, revealed leadership's mistrust of Altman and differing philosophies from its co-founders. Eventually, co-founder Ilya Sutskever and, just last week, CTO Mira Murati quit the company. Co-founder and President Greg Brockman has taken a leave of absence and other executives have recently quit the company. OpenAI is also in the midst of restructuring its corporate status from non-profit to for-profit. Despite waning investor interest, backlash from AI-weary consumers, and unfulfilled promises of AI's potential suggesting that the AI bubble might be ready to burst (or perhaps that it's slowly leaking after bursting months ago), OpenAI's funding round has proven investors with deep pockets are willing to bet on its success. OpenAI makes money from subscriptions to its ChatGPT Plus, ChatGPT Enterprise, and API accounts. As of August, OpenAI reported that ChatGPT has over 200 million weekly users, which was double the amount of users in November, 2023, and expects to bring in $11.6 billion in sales next year (per CNBC). But building and maintaining AI models isn't cheap. According to The Information, OpenAI could lose up to $5 billion this year.

OpenAI closes funding at $157 billion valuation, as Microsoft, Nvidia, SoftBank join round

Sam Altman during the Microsoft Build conference in Redmond, Wash., on May 21.Jason Redmond / AFP - Getty Images file OpenAI has closed its long-awaited funding round at a valuation of $157 billion, including the $6.6 billion the company raised from an extensive roster of investment firms and big tech companies. While OpenAI didn't name the investors in Wednesday's press release, a person with knowledge of the matter said the round was led by Thrive Capital and included participation from existing backer Microsoft as well as chipmaker Nvidia, SoftBank and others. Thrive planned to invest $1 billion in the round, CNBC previously reported. OpenAI's rapid ascent, which began with the launch of ChatGPT in late 2022, has been the biggest story in the tech industry over the last couple years, bringing the concept of generative artificial intelligence into the mainstream and paving the way for tens of billions of dollars of investments in AI infrastructure. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," OpenAI wrote in a blog post Wednesday. OpenAI generated $300 million in revenue last month, up 1,700% since the beginning of last year, CNBC confirmed last week, following reporting by The New York Times. The company expects to bring in $11.6 billion in sales next year, up from $3.7 billion in 2024, according to a person close to OpenAI who asked not to be named because the financials are confidential. But all that revenue is extremely costly, as OpenAI has to ramp up purchases of Nvidia's graphics processing units (GPUs) to train and run its large language models. The company expects to lose about $5 billion this year, the person said. Microsoft has invested billions of dollars in OpenAI and is a key partner as the software giant bolsters its Azure cloud business. Earlier this year, OpenAI was valued at a reported $80 billion, up from $29 billion in 2023. Following the viral growth of ChatGPT, momentum has continued with new products for businesses and an expansion into AI-generated photos and videos. OpenAI now has 250 million weekly active users on ChatGPT, CFO Sarah Friar told CNBC in a statement. There are also 11 million ChatGPT Plus subscribers and 1 million paying business users on ChatGPT, a person close to the company said. "AI is already personalizing learning, accelerating healthcare breakthroughs, and driving productivity," Friar said in the statement. "And this is just the start." OpenAI is experiencing plenty of growing pains along the way, including the loss of key executives, a trend that continued through last week. Last Wednesday, OpenAI Chief Technology Officer Mira Murati, who briefly served as interim CEO, said she would be leaving after 6½ years. Shortly after that, research chief Bob McGrew and Barret Zoph, a research vice president, said they were leaving the company. In an interview the next day at Italian Tech Week, OpenAI CEO Sam Altman said, "I think this will be hopefully a great transition for everyone involved and I hope OpenAI will be stronger for it, as we are for all of our transitions." Also on Thursday, OpenAI held an all-hands meeting, following the board's decision to consider restructuring the company to a for-profit business, according to a separate person with knowledge of the matter. Altman said the departures were not related to the potential restructuring, contrary to some media reports. Should the change occur, the nonprofit segment would remain as a separate entity, the source said. At Thursday's meeting, Altman denied reports of plans for him to receive a "giant equity stake" in the company, calling that information "just not true," according to a person who was in attendance. OpenAI Chairman Bret Taylor told CNBC in a statement last week that while the board has talked about the matter, no specific figures are on the table. "The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made," Taylor said. The latest funding round also included participation from Khosla Ventures, Altimeter Capital, Fidelity, MGX and Tiger Global, sources told CNBC.

OpenAI Secures $4B Credit Line To Supercharge AI Ambitions And Expand Nvidia-Powered Infrastructure: 'Provides Flexibility To Seize Future Growth Opportunities' - Citigroup (NYSE:C), Goldman Sachs Gr (NYSE:GS)

After securing a whopping $6.6 billion funding round, ChatGPT-parent OpenAI has bagged a $4 billion revolving credit line. What Happened: The new credit facility will bolster its liquidity to $10 billion, allowing the AI startup to invest in high-cost computing capacity including Nvidia Corporation's NVDA chips. "This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities," said OpenAI CFO Sarah Friar, in a blog on Thursday. The credit line is facilitated by a consortium of banks: JPMorgan Chase JPM, Citigroup, Inc. C, Goldman Sachs GS, Morgan Stanley MS, Banco Santander S.A. SAN, Wells Fargo WFC, Sumitomo Mitsui Banking Corporation, UBS Group AG UBS, and HSBC Holdings plc HSBC. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: Earlier this week, OpenAI, valued at nearly $157 billion, raised funds from returning venture capital investors such as Thrive Capital and Khosla Ventures. Microsoft Corporation MSFT, which has already invested approximately $13 billion into the AI firm over the last five years, and new investor Nvidia, also participated in the funding round. Despite major executive changes, including the sudden exit of CTO Mira Murati, investors remain optimistic about OpenAI's growth prospects. However, OpenAI has also faced criticism from Elon Musk, who accused the company of unfair funding practices. On the other hand, analysts expect a "tidal wave" of AI spending, with OpenAI's latest valuation seen as a trigger for this growth stage. Photo Courtesy: Shutterstock Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Elon Musk Gets Bold Font Removed From X's Main Timeline Because Of 'Excessive' Use: 'My Eyes Are Bleeding' Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

OpenAI Gets $4 Billion in Credit on Top of $6.6 Billion Funding

OpenAI has tapped global banks for a $4 billion revolving line of credit on top of its recent $6.6 billion fundraising, adding to its war chest as it plans to grow the company and develop artificial intelligence technology. In a statement Thursday announcing the credit facility, the company wrote, "This means we now have access to over $10 billion in liquidity, which gives us the flexibility to invest in new initiatives and operate with full agility as we scale."

OpenAI isn't going anywhere: raises $6.6B at $157B valuation

It was always expected to be a whopper, but the amount it raised -- $6.6 billion at a $157 billion total company valuation -- now makes it the largest venture capital round in history to date, according to Axios. The round was led by Thrive Capital, according to Bloomberg, while CNBC notes that heavy hitters including Nvidia and Microsoft plowed more cash into this round as well. In announcing the funding on its website, OpenAI noted that ChatGPT alone counts more than 250 million weekly unique users. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," the company wrote in a short blog post. Reasons for skepticism? However, the news was still greeted with skepticism among AI critics including the outspoken tech public relations expert and tech writer Ed Zitron, who's latest newsletter is headlined "OpenAI is a bad business" and argues that OpenAI's decision to take a reported $500 million from the infamous Softbank Venture Fund -- which has notably invested in duds like WeWork -- combined with its reliance on individual ChatGPT subscriptions rather than API usage or licensing, suggests it is not well positioned to succeed as a for-profit in the future. These are, in my opinion, fair criticisms, as is noting the fact that Apple reportedly declined to invest in the firm after giving it consideration and potentially in the wake of former chief technology officer Mira Murati's resignation just last week. And then there came the report from The Financial Times that OpenAI made part of the conditions of those who were throwing money its way that they not invest in rivals including Anthropic, which was founded by former OpenAI researchers and continues to pick up more exiting execs, and Musk's xAI -- recently reported to have switched on its Memphis training supercluster "Colossus" with 100,000+ Nvidia H100 GPUs -- seemingly showing that OpenAI is worried about the competition catching up. Musk, for his part, took the news of OpenAI's reported conditions on exclusive funding with his typical blunt criticism, calling the company evil on his X account. And indeed, the competition in the AI space is intensifying with more, newer models emerging such as Liquid AI's new non-transformer based Liquid Foundation Models (LFMs), and Google and Anthropic also fielding compelling enterprise and consumer-facing options. Meanwhile, Meta and Alibaba are releasing powerful open source models for free. The OpenAI bull case Still, OpenAI's models top the charts when it comes to the third-party performance benchmarks, and every time they have been overtaken, OpenAI has released an update or entire new class of models such as the o1 preview series that retakes the throne. So for now, fueled by $6.6 billion in fresh funding and with new models, developer tools, and aggressive cost cutting measures for developer customers (intelligence that is "too cheap to meter" in the words of many in the AI industry) -- it appears that OpenAI is not going anywhere anytime soon. It may, in fact, be too big to fail, as I speculated it was becoming a few weeks ago. For developers building products atop the company's AI models and frameworks, this is probably welcome news -- as they are likely to stable and supported going forward. Will OpenAI give GPT creators any more $$$? However, one big question remains regarding OpenAI's custom GPT Store, its version of a kind of AI app store which launched in January 2024 and allows any ChatGPT Plus user to create and share custom versions of ChatGPT designed to fulfill specific roles and perform specific tasks. OpenAI CEO and co-founder Sam Altman said at its developer conference DevDay in late 2023 that revenue sharing would be coming, and some users reported that they did receive some revenue from their GPTs, but we haven't heard much from OpenAI about it since. Now flush with cash, I'm wondering if OpenAI will start paying out more to more GPT creators (selfishly as well, since I've created a few custom GPTs -- full disclosure). I've reached out to the company to ask about that an will update when I hear back. Either way, OpenAI's coffers have been refilled, and despite the chaos behind the scenes, the company continues to ship new AI products regularly -- though we're all still waiting on the public release of its AI video model Sora.

OpenAI raises $6.6 billion in funds at $157 billion value

By Shirin Ghaffary, Katie Roof, Rachel Metz, Dina Bass, Bloomberg News The Tribune Content Agency OpenAI has completed a deal to raise $6.6 billion in new funding, giving the artificial intelligence company a $157 billion valuation and bolstering its efforts to build the world's leading generative AI technology. The funding round was led by Thrive Capital, the venture capital firm headed up by Josh Kushner, which put in $1.3 billion. Microsoft Corp., OpenAI's largest backer, put in about $750 million, on top of the $13 billion it had already invested in the startup, according to a person familiar with the matter. Other investors included Khosla Ventures, Fidelity Management & Research Co. and Nvidia Corp., the chipmaker whose powerful processors are at the center of the AI boom. Microsoft declined to comment. The deal is one of the largest-ever private investments, and makes OpenAI one of the three largest venture-backed startups, alongside Elon Musk's SpaceX and TikTok owner ByteDance Ltd. The size of the investment underscores the tech industry's belief in the power of AI and its appetite for the extremely costly research powering its advancement. Other investors writing major checks included Tiger Global Management, which put in $350 million, and Altimeter Capital, which invested at least $250 million, according to people familiar with the matter. Global backers in the round included SoftBank Group Corp. and the new Abu Dhabi-based tech investment firm MGX. SoftBank's investment was $500 million, according to one of the people, who asked not to be identified because the information is private. Investment firm Coatue Management put in $250 million, and venture firm Quiet Capital also participated. In a statement, the company said it would use the cash influx to drive forward AI research and increase its computing capacity. "AI is already personalizing learning, accelerating health care breakthroughs and driving productivity," OpenAI Chief Financial Officer Sarah Friar said. "And this is just the start." The huge valuation for OpenAI has transfixed Silicon Valley. "People are shocked at 150 billion bucks," said Altimeter Chief Executive Officer Brad Gerstner, speaking on stage at the Madrona IA Summit in Seattle on Wednesday. But he also cited reports that the startup expects to generate more than $10 billion in revenue next year - adding that a multiple of 10 times projected revenue isn't exorbitant for a company about to go public, giving Google and Facebook as comparable examples. The latest deal values OpenAI at more than $150 billion pre-money, before including the dollars raised in this round. Gerstner also said he hoped OpenAI would soon go public, and that it was the logical next step for the startup, which he called "the most important AI company in the United States, next to Nvidia." Apple Inc. didn't participate in the deal, although the company was previously in talks to invest, Bloomberg has reported. The iPhone maker has a partnership with OpenAI to integrate ChatGPT on its devices and through its Siri voice assistant. As part of that accord, Apple was previously in discussions to get a board observer role on OpenAI's board, although those plans were dropped, people familiar with the matter told Bloomberg. Some of the funding round was invested through so-called special purpose vehicles, where backers can pool money from a wider array of investors to buy a portion of the shares. For example, in addition to contributing its own capital, Thrive put together an SPV to invest in the company, one person said. OpenAI declined to comment on the SPVs. The financing deal follows a turbulent year for OpenAI. Last November, the company's board fired and then quickly rehired CEO Sam Altman. In the following months, the company has remade its board, hired hundreds of new employees, and lost several key leaders, including co-founder Ilya Sutskever and Chief Technology Officer Mira Murati. At the same time, OpenAI is discussing moving from its nonprofit structure - an unusual organization that has frustrated investors - to a for-profit model. The move would appease the company's backers, but could pose legal hurdles. As part of a transition, OpenAI has discussed awarding Altman equity in the company - a stake that could be worth more than $10 billion, though OpenAI's board said it hasn't discussed specific numbers. OpenAI kicked off a Silicon Valley obsession with the potential of AI when it debuted its chatbot, ChatGPT, in 2022. The tool can generate human-sounding responses to questions, and has amassed 250 million weekly active users, the company said. Its paid service, ChatGPT Plus, has 11 million subscribers, one person said. And its business-focused service has more than 1 million users, as Bloomberg has previously reported. A slate of new companies have sprung up to compete with OpenAI in recent years, including several that have been founded by former OpenAI employees - such as Anthropic and Safe Superintelligence. OpenAI is also facing intense competition from larger tech companies with vast resources, including Google and Amazon.com Inc., which are also developing their own AI models. In this funding round, OpenAI discouraged investors from backing rival companies, such as Anthropic or Musk's AI startup xAI, according to a person familiar with the matter. Bloomberg earlier reported that leading venture capital firm Sequoia Capital, which backed Safe Superintelligence, would not participate in the newest fundraising. (With assistance from Lizette Chapman.)

OpenAI closes record $6.6B funding round at $157B valuation - SiliconANGLE

Confirming recent rumors, OpenAI today announced that it has raised $6.6 billion from investors to support its artificial intelligence research. The raise, the largest funding round on record, values the ChatGPT developer at $157 billion. That's nearly double what it was worth following a tender offer earlier this year. Thrive Capital led the investment with a contribution that the Financial Times put at $1.6 billion. Most of that sum, $750 million, reportedly came from the venture capital firm's own funds while the rest was provided by its partners. Thrive Capital has the option to invest another $1 billion at a $150 billion valuation before the end of next year. The venture capital firm was joined by more than a half dozen other investors. The group included Microsoft Corp., Nvidia Corp., SoftBank Group Corp., Khosla Ventures, Altimeter Capital, Fidelity, Tiger Global and MGX. SoftBank and Khosla reportedly contributed $500 million each. The funding round is believed to be tied to an upcoming refresh of OpenAI's organizational structure. Currently, OpenAI operates as a nonprofit with a for-profit arm that leads its product engineering efforts. The ChatGPT developer reportedly plans to incorporate the for-profit arm as a benefit corporation and remove caps on investors' returns. According to Axios, the participants in OpenAI's latest funding round can ask for their money back if the reorganization is not completed within two years. The investment is said to include other unusual terms as well. Notably, OpenAI has reportedly asked the participants not to back competitors. That could complicate the fundraising efforts of rival Anthropic PBC, which is reportedly seeking to raise fresh capital at a valuation of up to $40 billion. That OpenAI's funding round doubled its valuation reflects the rapidly growing demand for its AI services. According to internal estimates obtained by the New York Times, those services are on track to generate $3.7 billion in revenue this year and $11.6 billion during 2025. CNBC, meanwhile, reported today that OpenAI has more than 250 million weekly users. About 11 million of those users have subscriptions to ChatGPT Plus, a paid version of the AI provider's chatbot with higher usage limits. Additionally, one million organizations have signed up for the business editions of ChatGPT. OpenAI is spending heavily to maintain its growth: CNBC's sources said that the AI provider is poised to lose $5 billion this year. With $6.6 billion in additional capital on its books, OpenAI can continue prioritizing growth over profitability for the foreseeable future. The investment will also make it easier for the company to shoulder the steep costs of training large language models. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," OpenAI stated in a brief blog post today. Recent rumors suggest that the company's development roadmap might not be limited to AI software alone. In July, The Information reported that OpenAI has discussed the possibility of teaming up with a chipmaker to design a custom machine learning accelerator. It's unclear whether the ChatGPT developer would only use the processor to power its AI models or might also sell it to other companies.

What next for OpenAI after $157 billion bonanza?

ChatGPT-maker OpenAI has become an AI powerhouse after securing Silicon Valley's largest-ever funding round. The company now faces the challenge of delivering on its promise to become the next Apple or Google. The funding OpenAI raised $6.6 billion in cash and secured a $4 billion credit line, catapulting the company to a staggering $157 billion valuation. There is no question that the investment round spearheaded by CEO Sam Altman and his newly hired CFO Sarah Friar made for a rude awakening for OpenAI rivals Google, Meta, xAI and Amazon-partnered Anthropic. Despite controversy, investors put down unheard of numbers with only a foggy sense of when they will get a return from a company that was unknown to the general public two years ago. Close partner Microsoft is again in on the deal, after its investment of $13 billion in 2023. New investors include Tokyo-based conglomerate SoftBank and AI chip maker Nvidia. Others include MGX, a United Arab Emirates state-backed fund created to invest in AI. Burn rate OpenAI needs the money to pay for the immense running costs of building generative AI from the bottom up. Delivering the powers of ChatGPT requires industrial-level computing power, and hefty pay packages for the world's most sought after researchers. OpenAI's cash-burn rate is already enormous. According to US media, this year the company is on track to lose $5 billion on revenue of $3.7 billion. It is projecting revenue will grow to $11.6 billion in 2025 and exponentially from there. "What drives this technology? It's compute first, and it's not cheap. It's great talent second," OpenAI CFO Friar told CNBC on Thursday. "We're going to have to really be careful and smart about how we raise money." Bad governance? OpenAI is a strange company by any normal business standards. The company was founded in 2015 by Elon Musk, Altman and others mainly out of fear that Google would get too far ahead in the nascent field, which they felt endangered humanity. To show their altruism, the anti-Google technologists launched OpenAI as a non-profit. Musk, who left the project in 2018, got things off the ground with a $50 million donation. As advances were made, Altman persevered and switched the company to a "capped profit" status that allowed for a limited level of money making. But OpenAI was still controlled by a board made up largely of AI researchers and academics that believed they were saving the world from the dangers of AI. Meanwhile at the company, pushed by Altman, staff raced to develop the world's most powerful generative AI and getting it to users. Crisis The schizophrenic set-up imploded spectacularly last November, when the board fired Altman out-of-the-blue. Within hours, OpenAI staff rebelled and, with Microsoft working in the background, Altman was reinstated. Those involved in Altman's ouster, including almost all of the company's original founders, have since left the company. Alarmed by the chaos, the new investors have demanded that OpenAI become a more classic "for-profit" outfit within two years. Admitting the change, CFO Friar said "we want to be a more traditional company. Why make things complicated that don't need to be complicated." Altman: multi-billionaire? Since the release of ChatGPT, Altman has been celebrated as the next Steve Jobs or Bill Gates, visionary tech leaders who were ruthless in business. The star-power drew the investors who want to reward Altman with equity in OpenAI and guarantee his commitment to the company's future. A share of just a few percentage points would turn Altman into a multi-billionaire, but also rankle critics who have questioned his incentives. Friar said that talks were ongoing on how to give Altman skin in the game, but insisted that "nothing has been set in stone right now."

What next for OpenAI after $157 billion bonanza?

San Francisco (AFP) - ChatGPT-maker OpenAI has become an AI powerhouse after securing Silicon Valley's largest-ever funding round. The company now faces the challenge of delivering on its promise to become the next Apple or Google. OpenAI raised $6.6 billion in cash and secured a $4 billion credit line, catapulting the company to a staggering $157 billion valuation. There is no question that the investment round spearheaded by CEO Sam Altman and his newly hired CFO Sarah Friar made for a rude awakening for OpenAI rivals Google, Meta, xAI and Amazon-partnered Anthropic. Despite controversy, investors put down unheard of numbers with only a foggy sense of when they will get a return from a company that was unknown to the general public two years ago. Close partner Microsoft is again in on the deal, after its investment of $13 billion in 2023. New investors include Tokyo-based conglomerate SoftBank and AI chip maker Nvidia. Others include MGX, a United Arab Emirates state-backed fund created to invest in AI. Burn rate OpenAI needs the money to pay for the immense running costs of building generative AI from the bottom up. Delivering the powers of ChatGPT requires industrial-level computing power, and hefty pay packages for the world's most sought after researchers. OpenAI's cash-burn rate is already enormous. According to US media, this year the company is on track to lose $5 billion on revenue of $3.7 billion. It is projecting revenue will grow to $11.6 billion in 2025 and exponentially from there. "What drives this technology? It's compute first, and it's not cheap. It's great talent second," OpenAI CFO Friar told CNBC on Thursday. "We're going to have to really be careful and smart about how we raise money." Bad governance? OpenAI is a strange company by any normal business standards. The company was founded in 2015 by Elon Musk, Altman and others mainly out of fear that Google would get too far ahead in the nascent field, which they felt endangered humanity. To show their altruism, the anti-Google technologists launched OpenAI as a non-profit. Musk, who left the project in 2018, got things off the ground with a $50 million donation. As advances were made, Altman persevered and switched the company to a "capped profit" status that allowed for a limited level of money making. But OpenAI was still controlled by a board made up largely of AI researchers and academics that believed they were saving the world from the dangers of AI. Meanwhile at the company, pushed by Altman, staff raced to develop the world's most powerful generative AI and getting it to users. Crisis The schizophrenic set-up imploded spectacularly last November, when the board fired Altman out-of-the-blue. Within hours, OpenAI staff rebelled and, with Microsoft working in the background, Altman was reinstated. Those involved in Altman's ouster, including almost all of the company's original founders, have since left the company. Alarmed by the chaos, the new investors have demanded that OpenAI become a more classic "for-profit" outfit within two years. Admitting the change, CFO Friar said "we want to be a more traditional company. Why make things complicated that don't need to be complicated." Altman: multi-billionaire? Since the release of ChatGPT, Altman has been celebrated as the next Steve Jobs or Bill Gates, visionary tech leaders who were ruthless in business. The star-power drew the investors who want to reward Altman with equity in OpenAI and guarantee his commitment to the company's future. A share of just a few percentage points would turn Altman into a multi-billionaire, but also rankle critics who have questioned his incentives. Friar said that talks were ongoing on how to give Altman skin in the game, but insisted that "nothing has been set in stone right now."

OpenAI reaches $157bn valuation after major funding round

Venture capital firm Thrive Capital will invest at additional $1bn next year if OpenAI reaches a revenue goal. OpenAI has raised $6.6bn in its latest funding round, reaching a valuation of $157bn - almost double its previous valuation. The funding round was led by venture capital firm Thrive Capital and included big name investors Nvidia, SoftBank, Fidelity, Khosla Ventures and the start-up's biggest supporter since 2019, Microsoft. While Apple was reported to have dropped out of investing in the round just days ago. Thrive Capital committed $1.2bn and negotiated a further investment of $1bn next year at the same valuation if the ChatGPT maker hits a revenue goal, according to Reuters. OpenAI expects $5bn in losses and $3.7bn in revenue this year, but hopes to earn $11.6bn in sales next year, CNBC reported last month. "We aim to make advanced intelligence a widely accessible resource," OpenAI said in a blogpost. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity and continue building tools that help people solve hard problems." Funding into OpenAI has come in the form of convertible notes, with a conversion into equity depending on the successful structural change of the company - from a not-for-profit to a for-profit. The announcement of OpenAI's transformation into a for-profit company came just last week, when it was also announced that CEO Sam Altman would receive equity in the company for the first time. However, Altman clarified that he will not receive a "giant equity stake" in the company. On the same day, the company's long-term chief technology officer, and interim CEO during Altman's brief ousting last year, Mira Murati announced that she is leaving. Research VP Barret Zoph and chief research officer Bob McGrew also announced they are leaving the company. Just three of the company's original 11 founders remain at the company. Earlier this week, co-founder Durk Kingma followed a string of former OpenAI alumni to join rival start-up Anthropic. Last month, OpenAI shared a preview of its latest large language model focused on "complex reasoning" called the o1 model. Available to ChatGPT subscribers and the company's "trusted API users", 01 is capable of "thinking" for a longer time, improving its reasoning ability, the company said. While yesterday, OpenAI's collaborator Microsoft launched a beta feature on its AI assistant Copilot called Think Deeper, an AI tool that tackles challenging questions requiring deeper analysis. 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's funding round lifts valuation to $157 billion

According to The Wall Street Journal, OpenAI has recently secured $6.6 billion with a new funding round which significantly increased the company's valuation to $157 billion. This sharp increase nearly doubles its previous valuation of $86 billion. The deal, however, includes a provision allowing investors to retract funds if OpenAI doesn't finalize its transition to a fully for-profit entity, moving away from its nonprofit roots. Thrive Capital led the investment with $1.25 billion, while Microsoft, a long-time supporter of OpenAI, added just under $1 billion. Other major participants included SoftBank, which contributed a $500 million stake, and Nvidia, which contributed $100 million. The UAE-based firm MGX also joined in, furthering its involvement in the AI world after partnering with Microsoft in an infrastructure initiative last month. Apple, which had explored investing but ultimately opted out, was absent from the list of investors. The minimum investment required to access OpenAI's financial records was $250 million, as reported by The Wall Street Journal. OpenAI's first CFO, Sarah Friar, was pivotal in orchestrating this funding round since joining the company in June. OpenAI's valuation now rivals major public companies like Goldman Sachs and Uber. The company faces stiff competition from the likes of Anthropic, Meta, and Google, all racing to develop advanced AI systems. Nevertheless, OpenAI has maintained significant momentum, with ChatGPT amassing around 250 million weekly active users, according to The Wall Street Journal's sources, and securing 11 million paying subscribers. Furthermore, nearly 1 million businesses now use OpenAI's services. The company's rapid growth has fueled internal shifts, moving from research-driven goals toward a more commercial focus. The rise of ChatGPT is generating consumer and enterprise revenue. But this evolution has also raised internal conflicts: leadership changes, and doubts on whether the company is devolving from its mission of making AI available for the benefit of the public good. The last two years have seen OpenAI shift from being primarily a research company to a highly enthusiastic business organization, especially with ChatGPT. The move towards consumer technology and enterprise services has led to internal friction, particularly surrounding the company's evolving mission. Last year, OpenAI faced a significant leadership crisis with its CEO's firing and subsequent rehiring, as well as discontent from former employees who felt the company's increasing focus on profitability compromised its original aim of advancing AI for the public good. Who is Durk Kingma, Anthropic's latest transfer from OpenAI? The company's shift to becoming fully for-profit is a response to market demand and a crucial move in securing additional investment. There is actually a lot more people willing to fund OpenAI to get to AGI, making the shift to a for profit model now pretty much crucial for the organization. This shift is indeed understood against the background of the need to maximize the value of the AI market which is expected to expand exponentially while at the same time sparking controversies around the entrepreneurially sustainable way of innovating that embraces both the benefits of algorithmic governance and the responsibility in handling the consequences that come with it.

ChatGPT-maker OpenAI closes massive funding round

OpenAI has closed a multi-billion dollar funding round, the company announced Wednesday, as the ChatGPT-maker seals its place as the world leader on artificial intelligence. The company, founded in 2015 and led by Sam Altman, said that the investors pumped in $6.6 billion propelling OpenAI to a staggering $157 billion valuation. The landmark injection of cash made OpenAI one of the world's most valuable privately run tech companies, on the same level as SpaceX or TikTok parent ByteDance. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," OpenAI said in a blog post. The investment was confirmed by Thrive Capital, the leading investor of the round. Investors also include Microsoft, chip making juggernaut Nvidia, Tiger Global and MGX, an investment firm controlled by the United Arab Emirates, reports said. OpenAI has become one of the most successful startups in Silicon Valley history, propelled to the headlines in 2022 when it released ChatGPT, its generative AI chatbot. The app was one of the fastest downloaded apps ever, with users getting their first glimpse of the power of generative AI that can churn out human-like content almost instantaneously on simple prompts. The tech world sees generative AI as the next big chapter in innovation, on par with the PC or smartphone, that will increase productivity exponentially at the workplace and at home. The cash injection comes at a tumultuous time for OpenAI, with a series of departures by key executives in recent months. Altman's role inside the company has also grown, less than a year after he was briefly fired by the OpenAI board over his management style and for pushing out new products too quickly. The coup against Altman only lasted a few days after employees rebelled and Microsoft, the company's biggest investor, orchestrated his return. The executives and board members who played roles in his exit have since left the company. Reports said the investment round would likely come with a reorganization of the company that would make it an official "for profit" firm, more typical of Silicon Valley startups. OpenAI, since its founding in 2015, has been run as a non-profit, with its money-making arm run separately and without control over the company. Altman is also thought to be getting equity in OpenAI with the new fund-raising round, which would likely make him a multi-billionaire. Another question on the table will be the handling of Elon Musk; the tech tycoon was an original investor in OpenAI and has since sued the company for becoming a money-making enterprise.

OpenAI completes deal that values company at $157 billion

SAN FRANCISCO -- OpenAI said Wednesday that it had completed a $6.6 billion fundraising deal that more than doubles the high-profile company's valuation from just nine months ago. The new fundraising round, led by investment firm Thrive Capital, values OpenAI at $157 billion, according to two people with knowledge of the deal. Microsoft, chipmaker Nvidia, tech conglomerate SoftBank, United Arab Emirates investment firm MGX and others are also putting money into OpenAI. The company started the artificial intelligence boom in 2022 with the release of its online chatbot ChatGPT, sparking a race to invest in startups that develop similar technology. And its latest investment round indicates that the tech industry's excitement over AI remains strong, despite concerns about the effectiveness and the safety of the technology. Investments in AI startups cooled earlier this year as several were essentially swallowed by tech giants Google, Microsoft and Amazon, which are building technology similar to what OpenAI has been working on. But OpenAI's profile has given it a major head start. Its revenues are rising quickly, but it is losing billions of dollars because of the unusually high cost of building and running AI technologies like ChatGPT. Just nine months ago, OpenAI was valued at $70 billion. The company now has about 1,700 employees, after adding more than 1,000 workers in that period. OpenAI expects about $3.7 billion in sales this year, according to financial documents reviewed by The New York Times. But it also expects to lose roughly $5 billion after paying for costs related to running its services and other expenses, according to an analysis of the documents by a financial professional. Thrive Capital has invested about $1.3 billion in OpenAI, with $750 million coming from its own fund and $550 million coming from other investors through an instrument called a special purpose vehicle, according to a person familiar with the deal. Thrive also has the option to invest up to $1 billion more in OpenAI at the same $157 billion valuation through 2025, the person said. Other investors do not have that option. "Every week, over 250 million people turn to ChatGPT regardless of the scale of the challenge -- whether it's communicating with someone who speaks another language or solving the toughest research problems," Sarah Friar, OpenAI's chief financial officer, said in a statement. The new funding arrives as the startup fights through growing pains. Executives are still trying to repair the company's reputation after its board of directors unexpectedly fired CEO Sam Altman in 2023. He was reinstated five days later, but OpenAI has lost several high-profile employees since then, including its chief scientist and co-founder Ilya Sutskever. Last week, OpenAI's chief technology officer, Mira Murati, as well as its chief research officer, Bob McGrew, and its vice president of research, Barret Zoph, said that they were leaving the company. The leadership tumult coincided with OpenAI's efforts to close its fundraising round. At least one company that explored investing, Apple, backed away and declined to invest, two people said. Some of the unrest stems from OpenAI's unusual structure. Altman, Elon Musk and others founded the AI research lab in 2015 as a nonprofit. But after Musk left the organization and stopped providing funding, Altman transformed OpenAI into what is called a capped-profit company, so that he could raise the billions of dollars needed to build AI. That meant OpenAI could provide a return for investors, but those profits were limited. The company was still governed by its original board of directors, which did not answer to investors. OpenAI has also long been in talks to restructure itself as a for-profit company. But that is not expected to happen until sometime next year, according to two people with knowledge of the company's plans. Under the terms of the new investment round, OpenAI has two years to transform into a for-profit business, or its funding will convert into debt, according to documents reviewed by the Times.

ChatGPT maker OpenAI raises $6.6 billion in fresh funding as it moves away from its nonprofit roots

OpenAI said Wednesday it has raised $6.6 billion in venture capital investments as part of a broader shift by the ChatGPT maker away from its nonprofit roots. Led by venture capital firm Thrive Capital, the funding round was backed by tech giants Microsoft, Nvidia and SoftBank, according to a source familiar with the funding who was not authorized to speak about it publicly. The investment represents one of the biggest fundraising rounds in U.S. history, and ranks as the largest in the past 17 years that doesn't include money coming from a single deep-pocketed company, according to PitchBook, which tracks venture capital investments. Microsoft pumped up OpenAI last year with a $10 billion investment in exchange for a large stake in the company's future growth, mirroring a strategy that tobacco giant Altria Group deployed in 2018 when it invested $12.8 billion into the now-beleaguered vaping startup Juul. OpenAI said the new funding "will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems." The company said the funding gives it a market value of $157 billion and will "accelerate progress on our mission." The influx of money comes as OpenAI has been looking to more fully convert itself from a nonprofit research institute into a for-profit corporation accountable to shareholders. While San Francisco-based OpenAI already has a rapidly growing for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity by safely building futuristic forms of artificial intelligence that can perform tasks better than humans. That sets certain limits on how much profit it makes and how much shareholders get in return for costly investments into the computing power, specialized AI chips and computer scientists it takes to build generative AI tools. But the governance structure would change if the board follows through with a plan to convert itself to a public-benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit. Along with Thrive Capital, the funding backers include Khosla Ventures, Altimeter Capital, Fidelity Management and Research Company, MGX, ARK Invest and Tiger Global Management. Not included in the round is Apple, despite speculation it might take a stronger interest in OpenAI's future after recently teaming up with the company to integrate ChatGPT into its products. Brendan Burke, an analyst for PitchBook, said that while OpenAI's existing close partnership with Microsoft has given it broad access to computing power, it still "needs follow-on funding to expand model training efforts and build proprietary products." Burke said it will also help it keep up with rivals such as Elon Musk's startup xAI, which recently raised $6 billion and has been working to build custom data centers such as one in Memphis, Tennessee. Musk, who helped bankroll OpenAI's early years as a nonprofit, has become a sharp critic of the company's commercialization. Associated Press writers Michael Liedtke in San Francisco and Kelvin Chan in London contributed to this report. The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives.

ChatGPT maker OpenAI raises $6.6 billion in fresh funding as it moves away from its nonprofit roots

OpenAI said Wednesday it has raised $6.6 billion in venture capital investments as part of a broader shift by the ChatGPT maker away from its nonprofit roots. Led by venture capital firm Thrive Capital, the funding round was backed by tech giants Microsoft, Nvidia and SoftBank, according to a source familiar with the funding who was not authorized to speak about it publicly. The investment represents one of the biggest fundraising rounds in U.S. history, and ranks as the largest in the past 17 years that doesn't include money coming from a single deep-pocketed company, according to PitchBook, which tracks venture capital investments. Microsoft pumped up OpenAI last year with a $10 billion investment in exchange for a large stake in the company's future growth, mirroring a strategy that tobacco giant Altria Group deployed in 2018 when it invested $12.8 billion into the now-beleaguered vaping startup Juul. OpenAI said the new funding "will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems." The company said the funding gives it a market value of $157 billion and will "accelerate progress on our mission." The influx of money comes as OpenAI has been looking to more fully convert itself from a nonprofit research institute into a for-profit corporation accountable to shareholders. While San Francisco-based OpenAI already has a rapidly growing for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity by safely building futuristic forms of artificial intelligence that can perform tasks better than humans. That sets certain limits on how much profit it makes and how much shareholders get in return for costly investments into the computing power, specialized AI chips and computer scientists it takes to build generative AI tools. But the governance structure would change if the board follows through with a plan to convert itself to a public-benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit. Along with Thrive Capital, the funding backers include Khosla Ventures, Altimeter Capital, Fidelity Management and Research Company, MGX, ARK Invest and Tiger Global Management. Not included in the round is Apple, despite speculation it might take a stronger interest in OpenAI's future after recently teaming up with the company to integrate ChatGPT into its products. Brendan Burke, an analyst for PitchBook, said that while OpenAI's existing close partnership with Microsoft has given it broad access to computing power, it still "needs follow-on funding to expand model training efforts and build proprietary products." Burke said it will also help it keep up with rivals such as Elon Musk's startup xAI, which recently raised $6 billion and has been working to build custom data centers such as one in Memphis, Tennessee. Musk, who helped bankroll OpenAI's early years as a nonprofit, has become a sharp critic of the company's commercialization. ___ Associated Press writers Michael Liedtke in San Francisco and Kelvin Chan in London contributed to this report. ___ The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives.

OpenAI secures $4 bln credit facility

Oct 3 (Reuters) - OpenAI said on Thursday it has secured a new $4 billion credit facility, in addition to the $6.6 billion investment the AI startup unveiled on Wednesday. The revolving credit facility that is undrawn at closing has been established with JPMorgan Chase (JPM.N), opens new tab, Citi (C.N), opens new tab, Goldman Sachs (GS.N), opens new tab, Morgan Stanley (MS.N), opens new tab, Santander (SAN.MC), opens new tab, Wells Fargo (WFC.N), opens new tab, SMBC (8316.T), opens new tab, UBS (UBSG.S), opens new tab and HSBC (HSBA.L), opens new tab. Advertisement · Scroll to continue The company now has access to over $10 billion in liquidity, OpenAI said in a blog post. Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shinjini Ganguli Our Standards: The Thomson Reuters Trust Principles., opens new tab

ChatGPT Maker OpenAI Raises $6.6 Billion in Fresh Funding as It Moves Away From Its Nonprofit Roots

OpenAI said Wednesday it has raised $6.6 billion in venture capital investments as part of a broader shift by the ChatGPT maker away from its nonprofit roots. Led by venture capital firm Thrive Capital, the funding round was backed by tech giants Microsoft, Nvidia and SoftBank, according to a source familiar with the funding who was not authorized to speak about it publicly. The investment represents one of the biggest fundraising rounds in U.S. history, and ranks as the largest in the past 17 years that doesn't include money coming from a single deep-pocketed company, according to PitchBook, which tracks venture capital investments. Microsoft pumped up OpenAI last year with a $10 billion investment in exchange for a large stake in the company's future growth, mirroring a strategy that tobacco giant Altria Group deployed in 2018 when it invested $12.8 billion into the now-beleaguered vaping startup Juul. OpenAI said the new funding "will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems." The company said the funding gives it a market value of $157 billion and will "accelerate progress on our mission." The influx of money comes as OpenAI has been looking to more fully convert itself from a nonprofit research institute into a for-profit corporation accountable to shareholders. While San Francisco-based OpenAI already has a rapidly growing for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity by safely building futuristic forms of artificial intelligence that can perform tasks better than humans. That sets certain limits on how much profit it makes and how much shareholders get in return for costly investments into the computing power, specialized AI chips and computer scientists it takes to build generative AI tools. But the governance structure would change if the board follows through with a plan to convert itself to a public-benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit. Along with Thrive Capital, the funding backers include Khosla Ventures, Altimeter Capital, Fidelity Management and Research Company, MGX, ARK Invest and Tiger Global Management. Not included in the round is Apple, despite speculation it might take a stronger interest in OpenAI's future after recently teaming up with the company to integrate ChatGPT into its products. Brendan Burke, an analyst for PitchBook, said that while OpenAI's existing close partnership with Microsoft has given it broad access to computing power, it still "needs follow-on funding to expand model training efforts and build proprietary products." Burke said it will also help it keep up with rivals such as Elon Musk's startup xAI, which recently raised $6 billion and has been working to build custom data centers such as one in Memphis, Tennessee. Musk, who helped bankroll OpenAI's early years as a nonprofit, has become a sharp critic of the company's commercialization. ___ Associated Press writers Michael Liedtke in San Francisco and Kelvin Chan in London contributed to this report. ___ The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives. Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

OpenAI gets that bag with a $6.6 billion funding round | Digital Trends

OpenAI is now one of the wealthiest private companies on Earth after successfully raising $6.6 billion in its latest funding round on a valuation of $157 billion. "Every week, over 250 million people around the world use ChatGPT to enhance their work, creativity, and learning," the company wrote in its announcement post. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems." Recommended Videos Existing backers such as Thrive Capital, Khosla Ventures, and Microsoft were joined by newcomers SoftBank and Nvidia. Apple, which had previously been in talks to invest, backed out earlier this week. Get your weekly teardown of the tech behind PC gaming ReSpec Subscribe Check your inbox! Privacy Policy The funding news comes as OpenAI considers restructuring its core business from a nonprofit to a for-profit model in an effort to make itself more attractive to investors. "We remain focused on building AI that benefits everyone, and we're working with our board to ensure that we're best positioned to succeed in our mission. The nonprofit is core to our mission and will continue to exist," an OpenAI spokesperson told Reuters at the time. The investment round also comes as OpenAI struggles to retain top talent. Since last November, when OpenAI's nonprofit board of directors unsuccessfully attempted to oust CEO Sam Altman from the company, a steady stream of researchers, founders and C-suite executives have resigned. Researchers Jan Leike and Ilya Sutskever both left in May, in protest of the company's disregard of safety guidelines in favor of hawking "shiny products." Chief technology officer Mira Murati tendered her resignation in late September, with research officer Bob McGrew and Barret Zoph, senior research executive, quickly following suit. According to a report from Reuters, OpenAI CFO Sarah Friar told employees that the company will offer to buy back their shares in the company at the new valuation. Some employees were allowed to cash out their shares earlier this year at OpenAI's previous valuation of $86 billion. As part of the proposed restructuring plan, Altman could receive as much as $150 billion in equity, making him one of the richest people on the planet.

ChatGPT maker OpenAI raises $6.6 billion in fresh funding as it moves away from its nonprofit roots

OpenAI says it has raised $6.6 billion in venture capital investments as part of a broader shift by the ChatGPT maker away from its nonprofit roots OpenAI said Wednesday it has raised $6.6 billion in venture capital investments as part of a broader shift by the ChatGPT maker away from its nonprofit roots. Led by venture capital firm Thrive Capital, the funding round was backed by tech giants Microsoft, Nvidia and SoftBank, according to a source familiar with the funding who was not authorized to speak about it publicly. The investment represents one of the biggest fundraising rounds in U.S. history, and ranks as the largest in the past 17 years that doesn't include money coming from a single deep-pocketed company, according to PitchBook, which tracks venture capital investments. Microsoft pumped up OpenAI last year with a $10 billion investment in exchange for a large stake in the company's future growth, mirroring a strategy that tobacco giant Altria Group deployed in 2018 when it invested $12.8 billion into the now-beleaguered vaping startup Juul. OpenAI said the new funding "will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems." The company said the funding gives it a market value of $157 billion and will "accelerate progress on our mission." The influx of money comes as OpenAI has been looking to more fully convert itself from a nonprofit research institute into a for-profit corporation accountable to shareholders. While San Francisco-based OpenAI already has a rapidly growing for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity by safely building futuristic forms of artificial intelligence that can perform tasks better than humans. That sets certain limits on how much profit it makes and how much shareholders get in return for costly investments into the computing power, specialized AI chips and computer scientists it takes to build generative AI tools. But the governance structure would change if the board follows through with a plan to convert itself to a public-benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit. Along with Thrive Capital, the funding backers include Khosla Ventures, Altimeter Capital, Fidelity Management and Research Company, MGX, ARK Invest and Tiger Global Management. Not included in the round is Apple, despite speculation it might take a stronger interest in OpenAI's future after recently teaming up with the company to integrate ChatGPT into its products. Brendan Burke, an analyst for PitchBook, said that while OpenAI's existing close partnership with Microsoft has given it broad access to computing power, it still "needs follow-on funding to expand model training efforts and build proprietary products." Burke said it will also help it keep up with rivals such as Elon Musk's startup xAI, which recently raised $6 billion and has been working to build custom data centers such as one in Memphis, Tennessee. Musk, who helped bankroll OpenAI's early years as a nonprofit, has become a sharp critic of the company's commercialization. ___ Associated Press writers Michael Liedtke in San Francisco and Kelvin Chan in London contributed to this report. ___ The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives.

OpenAI Has the Biggest Funding Round Ever and Crosses 250 Million Users in the Same Week

OpenAI almost doubled its valuation from $86 billion to $157 billion on Wednesday after a $6.6 billion funding round, the biggest venture capital deal ever. The ChatGPT-maker raised more than Elon Musk's xAI, which announced a funding round of $6 billion at a $24 billion valuation in May. Thrive Capital led the round, with an investment of $1.3 billion. Fidelity, Nvidia, and SoftBank also invested, but Microsoft remains the startup's largest corporate backer, adding $750 million in this round to its existing $13 billion investment. Apple was considering investing but decided not to in order to avoid future conflicts with OpenAI's competitors, per Barron's. Related: If OpenAI Makes Its Core Business For-Profit, It Could Mean a $10 Billion Payday for 39-Year-Old CEO Sam Altman In the funding announcement, OpenAI stated that it has increased its weekly number of users to over 250 million, a 50 million jump from two months ago. ChatGPT has more than double the user base now than it did in November 2023. OpenAI will use the funds to keep building AI tools and researching AI. The startup had a revenue of $300 million last month and is expecting $3.7 billion in revenue this year to $5 billion in losses. OpenAI has recently seen a wave of high-level departures, with OpenAI chief technology officer MIra Murati, vice president of research Barret Zoph, and chief research officer Bob McGrew, all leaving the company on the same day last week.

OpenAI has raised $6.6 billion, making it worth over $150 billion

OpenAI's multibillion-dollar funding round is now complete, giving the artificial intelligence startup a valuation of $157 billion. The $6.6 billion raise is one of the largest private investments ever and puts OpenAI among the top three largest startups with venture backing, Bloomberg reported, citing unnamed people familiar with the matter. Elon Musk's SpaceX and ByteDance, which owns TikTok, are the other two. Thrive Capital, led by Joshua Kushner, reportedly led the funding round. Tech behemoths Microsoft (MSFT) and Nvidia (NVDA) reportedly backed the round, which included investors such as Khosla Ventures, Altimeter Capital, SoftBank (SFTBY), and Abu Dhabi-based MGX. Meanwhile, Apple (AAPL), which has a partnership with OpenAI to integrate ChatGPT into its iPhone operating system, recently dropped out of talks to participate in the funding round, the Wall Street Journal reported. The new funding comes amid a spate of executive resignations and reports that OpenAI is spending more than it's making. The startup's monthly revenue reached $300 million in August -- up 1,700% from the start of 2023, the New York Times reported. The New York Times (NYT) added that OpenAI expects to end the year with $3.7 billion in annual sales, according to financial documents its reporters reviewed. However, the startup also anticipates losing around $5 billion this year due to expenses such as running its AI models and paying employees, according to the review. Next year, OpenAI reportedly expects $11.6 billion in revenue. OpenAI is also reportedly considering restructuring its nonprofit status to attract investors, the Financial Times previously reported, citing unnamed people familiar with the matter. As OpenAI considers a for-profit structure, CEO Sam Altman has reportedly told employees he doesn't plan to get a "giant equity stake" in the company. In a meeting, both Altman and Sarah Friar, OpenAI's chief financial officer, told employees the company's investors are concerned over Altman not having equity, CNBC reported.

OpenAI will fall the hardest when the AI bubble bursts, analyst says

OpenAI is now worth more than people were expecting. Wednesday, the artificial intelligence startup announced it had completed a $6.6 billion funding round, valuing it at $157 billion. The ChatGPT-maker's raise is the largest private investment ever and puts OpenAI among the top three largest startups with venture backing, Bloomberg reported. Before the deal was finalized, OpenAI was expected to raise $6.5 billion in a round that would value it at $150 billion. "OpenAI needs follow-on funding to expand model training efforts and build proprietary products," Brendan Burke, senior emerging technology analyst at PitchBook (MORN), said in a statement shared with Quartz. With the funding, OpenAI can keep up with its new competitor, xAI, which recently raised $6 billion, in building custom data centers, Burke said. He added that both multibillion-dollar raises show "the quantum of funding needed to remain competitive for frontier training efforts with the latest hardware." However, Richard Windsor, founder of research firm Radio Free Mobile, said in a note after OpenAI's raise that the startup "has capitalized on investors' desperation to invest" in AI and set "very unusual terms that are yet another indication that AI remains in the midst of its 4th and largest bubble." In OpenAI's funding announcement, the company said ChatGPT has over 250 million users globally every week. The company said in September that it had reached one million paid business users, and an unnamed person told CNBC (CMCSA) the company has 11 million subscribers to ChatGPT Plus. In August, the startup's monthly revenue reached $300 million -- up 1,700% from the start of 2023, the New York Times (NYT) reported. OpenAI expects to end the year with $3.7 billion in annual sales, according to financial documents that reporters at the New York Times reviewed. The report also found that OpenAI expects $11.6 billion in revenue next year. According to PitchBook, the startup is "progressing toward $5 billion in annual recurring revenue," mostly due to ChatGPT. Burke said OpenAI's "revenue growth supports further valuation growth, which encourages employees to remain at the company and progresses toward the trillion-dollar valuation that CEO Sam Altman believes the company can grow into." But OpenAI's revenue expectations will require its number of subscribers to grow by four times what it currently is, according to Windsor. "This is supposed to be achieved with no price erosion despite an increasingly bewildering number of competitors and Mark Zuckerberg's contention that everyone is already 'slashing prices' to compete with Llama 3 priced at $0 per month," Windsor said. In a note prior to the raise, Windsor said OpenAI "is no longer miles ahead of the competition," and that with Meta's (META) release of its flagship open-source Llama models, "the stage is set for rapid price erosion." Another sign of a bubble, he said, is that free generative AI services are adding more features. "This is the pin that bursts the [AI] bubble in my opinion and given how much it has been inflated, there will be a significant correction to reality," Windsor said. The startup also anticipates losing around $5 billion this year due to expenses such as running its AI models and paying employees, according to the New York Times' review. But according to Windsor's calculations, "ChatGPT+ should be hugely profitable by itself leading me to wonder where the rest of the money is going." According to Windsor, the valuations of companies adjacent to generative AI, such as alternative energy startups and chipmakers such as Qualcomm (QCOM) and Nvidia (NVDA) -- where Windsor said he sees most of the $6.6 billion raise likely going -- "are far more reasonable and both will still perform well even if generative AI fails to live up to expectations." Meanwhile, valuations of OpenAI and its competitors, who the startup has reportedly asked its investors not to back, "will only be able to defy gravity for so long" before a correction happens, Windsor said. According to Crunchbase, global venture funding for startups slowed in the third quarter of this year, but startups in the AI sector were at the top for investments. OpenAI's new funding comes amid a spate of executive resignations and other governance issues, Windsor said, which means the startup will likely "fall the furthest and the hardest when the bubble eventually does burst." OpenAI did not immediately respond to a request for comment. While the release of the company's "reasoning" model, o1, and internal testing on frontier models "justifies continued investment in model development," PitchBook also noted OpenAI's executive departures, saying the company will likely evolve "with different executive leadership than that of the ChatGPT era." According to PitchBook estimates, the generative AI software market is on track to double next year, exceeding $30 billion.

OpenAI raises USD6.6b in fresh funding

OpenAI said Wednesday it has raised USD6.6 billion in venture capital investments as part of a broader shift by the ChatGPT maker away from its nonprofit roots. Led by venture capital firm Thrive Capital, the funding round was backed by tech giants Microsoft, Nvidia and SoftBank, according to a source familiar with the funding who was not authorised to speak about it publicly. The investment represents one of the biggest fundraising rounds in US history, and ranks as the largest in the past 17 years that doesn't include money coming from a single deep-pocketed company, according to PitchBook, which tracks venture capital investments. Microsoft pumped up OpenAI last year with a USD10 billion investment in exchange for a large stake in the company's future growth, mirroring a strategy that tobacco giant Altria Group deployed in 2018 when it invested USD12.8 billion into the now-beleaguered vaping startup Juul. OpenAI said the new funding "will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems." The company said the funding gives it a market value of USD157 billion and will "accelerate progress on our mission." The influx of money comes as OpenAI has been looking to more fully convert itself from a nonprofit research institute into a for-profit corporation accountable to shareholders. While San Francisco-based OpenAI already has a rapidly growing for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity by safely building futuristic forms of artificial intelligence that can perform tasks better than humans. That sets certain limits on how much profit it makes and how much shareholders get in return for costly investments into the computing power, specialised AI chips and computer scientists it takes to build generative AI tools. But the governance structure would change if the board follows through with a plan to convert itself to a public-benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit. Along with Thrive Capital, the funding backers include Khosla Ventures, Altimeter Capital, Fidelity Management and Research Company, MGX, ARK Invest and Tiger Global Management. Microsoft said in a brief statement Wednesday that it looks forward to continuing its OpenAI partnership. Nvidia, a leading designer of the chips needed to build and run AI systems, declined to comment. The amount of each funder's investment has not been disclosed. Not included in the round is Apple, despite speculation it might take a stronger interest in OpenAI's future after recently teaming up with the company to integrate ChatGPT into its products. Brendan Burke, an analyst for PitchBook, said that while OpenAI's existing close partnership with Microsoft has given it broad access to computing power, it still "needs follow-on funding to expand model training efforts and build proprietary products." Burke said it will also help it keep up with rivals such as Elon Musk's startup xAI, which recently raised USD6 billion and has been working to build custom data centers such as one in Memphis, Tennessee. Musk, who helped bankroll OpenAI's early years as a nonprofit, has become a sharp critic of the company's commercialisation.

OpenAI raises $6.6bn in funding, is valued at $157bn

The startup behind ChatGP, which is reportedly planning to become a for-profit business, is now valued on par with Uber OpenAI has raised $6.6bn in a funding round that values the artificial intelligence business at $157bn, with chipmaker Nvidia and Japanese group SoftBank among its investors. The San Francisco-based startup, responsible for the ChatGPT chatbot, did not give details of a reported restructuring that will transform it into a for-profit business. The funding round was led by Thrive Capital, a US venture capital fund, and other backers include MGX, an Abu Dhabi-backed investment firm. OpenAI's post-fundraising valuation puts it on a par with Uber, although it remains far below the $3tn level of its biggest backer of recent years, Microsoft, which also joined the fundraising. Other investors included Nvidia, a dominant player in the market for the chips that train and operate AI models, and Softbank, which counts the UK chip designer ARM among its investments. Sarah Friar, OpenAI's chief financial officer, highlighted ChatGPT's popularity, with more than 250 million weekly active users. "Every week, over 250 million people turn to ChatGPT regardless of the scale of the challenge - whether it's communicating with someone who speaks another language or solving the toughest research problems. AI is already personalising learning, accelerating healthcare breakthroughs, and driving productivity. And this is just the start," she said. OpenAI, which is reportedly heading for a loss of $5bn this year, said the fundraising would allow it to "double down" on cutting-edge AI research and increase its "compute capacity" - one of the key cost factors in building and operating powerful AI models. The startup did not give an update on a mooted corporate restructuring that could see it shed its non-profit status and become a fully for-profit entity. Currently, OpenAI is run by a non-profit board but has for-profit subsidiary, in which Microsoft is the biggest backer with returns to investors and employees capped. Sam Altman, OpenAI's chief executive, could also receive a stake in the restructured company, according to reports. Last week a former OpenAI employee, William Saunders, told the Guardian he was concerned that the restructuring could encourage the AI startup to cut corners on safety. OpenAI's charter commits the company to building artificial general intelligence - which it describes as "systems that are generally smarter than humans" - that benefits "all of humanity".

OpenAI is now valued at $157 billion

OpenAI has nearly doubled what investors think it's worth -- but there's a catch. OpenAI, the company behind ChatGPT, has now raised $6.6 billion in a new funding round that values the company at $157 billion, nearly doubling its previous valuation of $86 billion, according to a report from The Wall Street Journal. The funding round comes with strings attached: Investors have the right to withdraw their money if OpenAI does not complete its planned conversion from a nonprofit (with a for-profit division) to a fully for-profit company. Venture capital firm Thrive Capital led the funding round with a $1.25 billion investment. Microsoft, a longtime backer of OpenAI to the tune of $13 billion, contributed just under $1 billion to the latest round. New investors joined the round, including SoftBank with a $500 million investment and Nvidia with $100 million. The United Arab Emirates-based company MGX also invested in OpenAI during this funding round. MGX has been busy in AI recently, joining an AI infrastructure partnership last month led by Microsoft. Notably, Apple was in talks to invest but ultimately did not participate. WSJ reports that the minimum investment required to review OpenAI's financial documents was $250 million. In June, OpenAI hired its first chief financial officer, Sarah Friar, who played an important role in organizing this funding round, according to the WSJ.

OpenAI Completes Deal That Values Company at $157 Billion

OpenAI said on Wednesday that it had completed a $6.6 billion fund-raising deal that more than doubles the high-profile company's valuation from just nine months ago. The new fund-raising round, led by the investment firm Thrive Capital, values OpenAI at $157 billion, according to two people with knowledge of the deal. Microsoft, the chipmaker Nvidia, the tech conglomerate SoftBank, the United Arab Emirates investment firm MGX and others are also putting money into OpenAI. The company started the A.I. boom in 2022 with the release of its online chatbot ChatGPT, sparking a race to invest in start-ups that develop similar technology. And its latest investment round indicates that the tech industry's excitement over artificial intelligence remains strong, despite concerns about the effectiveness and the safety of the technology. Investments in A.I. start-ups cooled earlier this year as several were essentially swallowed by the tech giants Google, Microsoft and Amazon, which are building technology similar to what OpenAI has been working on. But OpenAI's profile has given it a major head start. Its revenues are rising quickly, but it is losing billions of dollars because of the unusually high cost of building and running A.I. technologies like ChatGPT. Just nine months ago, OpenAI was valued at $70 billion. The company now has about 1,700 employees, after adding more than 1,000 workers in that period. OpenAI expects about $3.7 billion in sales this year, according to financial documents reviewed by The New York Times. But it also expects to lose roughly $5 billion after paying for costs related to running its services and other expenses, according to an analysis of the documents by a financial professional.

OpenAI has just reached a record valuation: No one knows how they have achieved $157 billion so far - Softonic

Microsoft, the main sponsor of OpenAI, contributed $750 million to OpenAI Sam Altman's company has just raised the astonishing amount of 6.6 billion dollars, resulting in a value of 157 billion. Even for a huge Silicon Valley company, that's a lot of money. In the midst of the company's downfall, if we consider the foundational concept of a non-profit organization, OpenAI has not disclosed how it will invest the capital, only stating that it will accelerate AI research and increase its computing capacity. In an unprecedented operation, OpenAI has raised 6.6 billion dollars in new funding, bringing its valuation to the astonishing figure of $157 billion. This investment round is one of the largest in history in private markets and confirms OpenAI's position as a leader in the AI race. Thrive Capital, led by Josh Kushner, spearheaded the funding round with an investment of 1.3 billion dollars. Microsoft, the main sponsor of OpenAI, contributed another 750 million dollars, as reported by a source to Bloomberg, which brings Redmond's total investment to nearly 14 billion dollars. Other investors included Nvidia, Khosla Ventures, Fidelity Management & Research Co, Tiger Global Management, Altimeter Capital, Coatue Management, and the venture capital firm Quiet Capital. The funding round also attracted global interest, as the Japanese group SoftBank and MGX, based in Abu Dhabi, joined the list of investors, according to people familiar with the matter who spoke to Bloomberg. SoftBank's investment amounted to 500 million dollars, according to one of the sources. Funding has turned OpenAI into one of the three largest venture-backed startups, along with Elon Musk's SpaceX and ByteDance, the owner of TikTok. OpenAI plans to use this capital injection to accelerate AI research and expand its computing capacity. "The new funding will allow us to double down on our leadership in cutting-edge AI research, increase computing capacity, and continue creating tools that help people solve difficult problems," the company stated when announcing the operation.

OpenAI Now Valued at $157B After Latest Funding Round

OpenAI's investors reportedly can withdraw their funds if the firm doesn't convert into a for-profit firm within two years but can't invest in its largest private rivals. Artificial intelligence (AI) giant OpenAI has raised $6.6 billion in new funding at a $157 billion valuation -- more than the market caps of companies like Uber Technologies (UBER) and Lowe's (LOW). The latest funding values the startup behind ChatGPT at nearly double the $86 billion it reportedly was valued at early this year. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," the Microsoft (MSFT)-backed company said. OpenAI didn't disclose the investors but according to The Wall Street Journal, venture capital firm Thrive Capital led the funding round, which also included Microsoft, AI chip darling Nvidia (NVDA), SoftBank, and Cathie Wood's Ark Investment Management. Investors in the funding round will have the right to pull out their cash if OpenAI doesn't convert into a for-profit firm within two years, according to the Journal. The company reportedly told the investors it doesn't want them to invest in its largest private rivals, including Elon Musk's xAI, Anthropic, and Safe Superintelligence, co-founded by former OpenAI chief scientist Ilya Sutskever.

OpenAI value surges to $157bn in funding deal

The influx comes as the company has been in the spotlight, in part for internal leadership drama and debate over its future status. Chief executive Sam Altman is said to be restructuring the company to become a for-profit entity, stripping it of its non-profit board. While the company's transformation has helped attract investors, it has alienated some members of its staff and critics. Those critics include OpenAI co-founder Elon Musk who departed the firm in 2018. He has said the company has abandoned its founding mission of developing AI for the benefit of humanity. OpenAI is widely credited with helping bring artificial intelligence tools into the mainstream and sparking a gush of wider investment and interest in the sector. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," OpenAI said. Funders in the latest round included investment firm Thrive Capital, Japanese tech conglomerate SoftBank, American chip giant Nvidia, and Microsoft, which already has a large stake in the company. Under the terms of the deal, investors can renegotiate or claw back their funds if the structural change into a for-profit does not take effect within two years. It also hinges on and the removal of cap on returns for investors. While the valuation announced Wednesday looked high by normal standards, "these are not normal times," said Karl Freund, principal analyst at Cambrian AI Research. "Unless AI is somehow a bust, which I cannot imagine, OpenAI will be a powerful force to be reckoned with." OpenAI said it has 250 million weekly active users, as well as one million paying business customers. The company is on track to generate $3.6bn in revenue. But projected losses of more than $5bn are set to outpace revenue, according to Reuters. Pressure to quickly rollout new versions of its blockbuster chatbot has also strained relations between OpenAI's research and safety teams and staff focused on monetising the company's products, according to reports. OpenAI has seen an exodus of key executives in the year since Mr Altman was briefly ousted as its top executive in November, with departures including former chief scientist Ilya Sutskever. Last week, the company's long-time chief technology officer Mira Murati stepped down, saying in a statement that she had "made the difficult decision to leave" after much reflection. Two top OpenAI researchers also announced their departures the same day as Murati.

OpenAI Closes New Funding Round, Raising $6.6B

OpenAI said it has completed a deal to raise $6.6 billion in new funding, giving the AI company a $157 billion valuation, and bolstering its efforts to build the world's leading generative AI technology. The startup's also announced a $4 billion credit line from banks around the world giving it access to a more than $10 billion war chest. Bloomberg's Rachel Metz joins Caroline Hyde and Ed Ludlow on "Bloomberg Technology." (Source: Bloomberg)

OpenAI rakes in over $6 billion in new funding

The tech startup could still lose investors if it fails to convert to a for-profit model. Now that OpenAI is becoming a for-profit company, it's making a tidy profit in the process. reported that OpenAI has raised $6.6 billion in new funding from investors, nearly doubling its value to $157 billion. The new funding also makes it the largest venture capital deal in history. The new investors jumped on board after the artificial intelligence startup planned to switch from a charitable non-profit to . If OpenAI fails to make the move to for-profit, investors have the right to pull their funding, according to . The venture-capital firm Thrive Capital founded by Joshua Kushner, the youngest son of convicted-turned-pardoned real estate developer Charles Kushner, led the new round of funding with $1.25 billion. Other investors included SoftBank, Nvidia, Fidelity Management and OpenAI's previous largest investor Microsoft. One name that was notably absent from the investor list is Apple. The tech giant was in the process of negotiating a funding deal but apparently . Funding isn't the only thing that's growing for OpenAI. Its AI app ChatGPT has attracted 250 million weekly active users, up from announced at the end of August, and 11 million paying subscribers. The higher usage rate has OpenAI officials thinking they should to $22 a month by the end of the year and $44 a month in the next five years.

OpenAI Raises USD 6.6 Billion to Accelerate AI Research and Expansion

Over 250 million people use ChatGPT weekly, with 11 million ChatGPT Plus subscribers. OpenAI announced it has raised USD 6.6 billion in new funding at a valuation of USD 157 billion to accelerate progress in AI research and expansion. "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," the ChatGPT maker said in a Wednesday announcement. Also Read: AI Can Help You Be More Productive at Work, Says Microsoft CEO and More While OpenAI did not disclose the investors in its press release, a source familiar with the matter said the round was led by Thrive Capital and included participation from existing investor Microsoft, as well as chipmaker Nvidia, SoftBank, and others, according to a CNBC report. The company expects to generate USD 11.6 billion in revenue next year, up from USD 3.7 billion in 2024, according to a source close to OpenAI, who requested anonymity due to the confidentiality of the financial details, the report added. "Every week, over 250 million people around the world use ChatGPT to enhance their work, creativity, and learning. Across industries, businesses are improving productivity and operations, and developers are leveraging our platform to create a new generation of applications. And we're only getting started," OpenAI said in its official release. "There are also 11 million ChatGPT Plus subscribers and 1 million paying business users on ChatGPT," a person close to the company was quoted as saying in the report. Also Read: Microsoft, Dell, Google and Others Launch Initiatives to Propel AI Infrastructure and Innovation "AI is already personalising learning, accelerating healthcare breakthroughs, and driving productivity," CFO Sarah Friar was quoted in the report. OpenAI says it can unlock the technology's full potential by collaborating with key partners, including the US and allied governments.

OpenAI closes $6.6 billion funding haul at valuation of $157 billion with investment from Microsoft and Nvidia

Oct 2 (Reuters) - OpenAI has raised $6.6 billion from investors at a post-money valuation of $157 billion, cementing the ChatGPT maker's status as one of the most valuable private companies in the world, sources familiar with the matter said on Wednesday. The funding has attracted returning venture capital investors including Thrive Capital and Khosla Ventures, as well as OpenAI's biggest corporate backer Microsoft (MSFT.O), opens new tab, and new participation from Nvidia (NVDA.O), opens new tab. Reporting by Krystal Hu in New York; Editing by Lisa Shumaker Our Standards: The Thomson Reuters Trust Principles., opens new tab Krystal Hu Thomson Reuters Krystal reports on venture capital and startups for Reuters. She covers Silicon Valley and beyond through the lens of money and characters, with a focus on growth-stage startups, tech investments and AI. She has previously covered M&A for Reuters, breaking stories on Trump's SPAC and Elon Musk's Twitter financing. Previously, she reported on Amazon for Yahoo Finance, and her investigation of the company's retail practice was cited by lawmakers in Congress. Krystal started a career in journalism by writing about tech and politics in China. She has a master's degree from New York University, and enjoys a scoop of Matcha ice cream as much as getting a scoop at work.

OpenAI Market Cap Rivals Uber, AT&T After $6.6 Billion Fundraise | PYMNTS.com

OpenAI has reportedly raised $6.6 billion in new funding, nearly doubling its valuation. The artificial intelligence (AI) startup is now valued at $157 billion, The Wall Street Journal (WSJ) reported Wednesday (Oct. 7), noting that this figure puts the company in the same market capitalization territory of the likes of Uber, AT&T and Goldman Sachs. OpenAI was last valued at $86 billion early in the year after its employees sold their shares. According to WSJ, investors in this round will get the right to pull their money if OpenAI doesn't carry out its planned switch from a nonprofit to for-profit company. The round was headed by venture-capital firm Thrive Capital, which invested $1.25 billion, sources told WSJ. Longtime OpenAI partner/investor Microsoft contributed a little under $1 billion, while SoftBank put in around $500 million, and AI chip maker Nvidia, which invested about $100 million, one of the sources said. The sources told WSJ that investors who wanted to review OpenAI's financial documents were required to contribute at least $250 million. Writing about the company's shift from nonprofit to for-profit last week, PYMNTS noted that the pivot is reshaping the AI landscape and bringing up questions about the future of AI innovation, market competition and tech sector partnerships. "The potential shift comes at a crucial time when AI technology is becoming integrated into consumer products and enterprise solutions," PYMNTS wrote. "OpenAI's new business approach will likely have significant implications for its relationships with key stakeholders, notably Apple and Microsoft, while also affecting its standing among potential rivals." Industry experts argued this move could usher in tighter collaborations and deeper integrations with major platforms. "Already, deep integrations exist in place, while a new spotlight by OpenAI might directly align their capabilities further with these platforms," John Russo, VP of healthcare solutions at OSP, told PYMNTS. "That would mean tighter collaboration in the expansion of AI applications across their ecosystems." But this alignment may also present obstacles, particularly with companies known for stringent privacy policies. For example, Russo noted that Apple "may want strategic changes in the model to fit their strict guidelines." The recent partnership between OpenAI and the iPhone maker is especially notable in light of the startups move to a for-profit model. "Its partnership with Apple, particularly integrating ChatGPT into iOS 18, is a game-changer, giving OpenAI unprecedented access to the consumer market," Kaveh Vahdat, founder and CEO of RiseAngle, a generative AI game creation company, said in an interview with PYMNTS.

OpenAI plans to build even larger AI model as value skyrockets

Now the world's third largest venture-backed company, OpenAI has signalled that it will further boost its AI research. OpenAI has almost doubled its valuation to $157 billion (€142 billion) after the largest venture capital deal ever, making the ChatGPT maker the third-largest venture-backed company globally behind SpaceX and ByteDance. The generative artificial intelligence (GenAI) company said it raised $6.6 billion (€6 billion) on Wednesday which would be used to "accelerate progress" in its mission, OpenAI said in a statement shared with Euronews Next. The announcement comes shortly after multiple reports that the start-up is considering transforming into a for-profit benefit corporation, which will no longer be controlled by its non-profit board. The company, which was founded in 2015 and led by Sam Altman, said it plans to use the funds for AI research, increase computing capacity, and develop tools for solving complex problems. Thrive Capital led the funding round, with participation from SoftBank, Microsoft, Nvidia, Tiger Global, and MGX, an investment firm controlled by the United Arab Emirates (UAE). According to the Financial Times, OpenAI imposed a condition of exclusivity on investors, which prevents them from investing in rival AI startups, such as Anthropic or Elon Musk's xAI. Apple, which uses OpenAI, reportedly withdrew from negotiations on participating in the funding. "Every week, over 250 million people turn to ChatGPT regardless of the scale of the challenge - whether it's communicating with someone who speaks another language or solving the toughest research problems," Sarah Friar, OpenAI's Chief Financial Officer, said in a statement. "AI is already personalising learning, accelerating healthcare breakthroughs, and driving productivity. And this is just the start," she added. 'Not a normal company' OpenAI boss Altman said last month that it was "not a normal company" in a memo announcing the company's chief technology officer Mira Murati had resigned. The company has also seen inner turmoil with Altman being briefly fired by the OpenAI board over his management style and for rolling out new products too quickly, sparking safety concerns. The coup against Altman lasted a few days after employees said they would leave OpenAI. Microsoft, the company's biggest investor, then orchestrated his return. Last month, multiple reports said that the start-up is considering transforming into a for-profit benefit corporation, which will no longer be controlled by its non-profit board. Altman is also reported to be getting equity in OpenAI. The company told Euronews Next that "the board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity," but added that "no specific figures have been discussed nor have any decisions been made".

OpenAI's Roller-Coaster Week of Funding Windfalls, Product Pushes and Executive Departures | PYMNTS.com

In a whirlwind week that has left the tech world buzzing, artificial intelligence (AI) powerhouse OpenAI secured a staggering $6.6 billion in funding, unveiled new products, and weathered the unexpected departure of multiple top executives. The cascade of events underscores OpenAI's dominance in the AI arms race, potentially accelerating the commercialization of AI technologies. The developments also signal a shift in the AI sector, with OpenAI poised to fast-track the deployment of AI technologies despite organizational challenges. "OpenAI's massive funding round is a game-changer for the AI industry," Matt Hasan, CEO of aiRESULTS, told PYMNTS. "It's going to supercharge their research and development, making it tougher for smaller players to keep up. With big names like Microsoft and Nvidia backing them, OpenAI is set to dominate the AI landscape even more." In a press release, the company said, "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems." The company's recent product announcements have also garnered attention. The company has introduced the Realtime API, a tool that enables developers to build low-latency, multimodal experiences in their apps. "From language apps and educational software to customer support experiences, developers have already been leveraging voice experiences to connect with their users," OpenAI described the usefulness of this new offering. "Now with the Realtime API and soon with audio in the Chat Completions API, developers no longer have to stitch together multiple models to power these experiences. Instead, you can build natural conversational experiences with a single API call." OpenAI's latest product announcements, like the RealTime API and Vision Fine-Tuning, show they're doubling down on making AI more accessible and developer-friendly, Hasan said. "It's clear they're focusing on empowering developers to build innovative applications rather than just competing in the consumer space," he added. While OpenAI celebrates its technological and financial triumphs, the company is grappling with changes in its leadership team. In a surprising turn of events, Chief Technology Officer Mira Murati announced her departure after 6½ years with the company. Murati, who played a crucial role in launching products like ChatGPT and DALL-E, explained her decision in a memo to employees: "I'm stepping away because I want to create the time and space to do my own exploration." Murati isn't the only high-profile executive heading for the exit. Bob McGrew, OpenAI's chief research officer, and Barret Zoph, VP of post-training, are also leaving the company. This exodus of top talent has raised eyebrows across the industry, prompting questions about the internal dynamics at OpenAI. CEO Sam Altman addressed the departures in a separate note to employees, attempting to quell concerns and maintain morale. "Leadership changes are a natural part of companies, especially companies that grow so quickly and are so demanding," Altman wrote on X. "I obviously won't pretend it's natural for this one to be so abrupt, but we are not a normal company." The timing of these departures is particularly noteworthy, coming just before OpenAI's annual Dev Day conference in San Francisco and almost a year after a boardroom coup that temporarily ousted Altman himself. This sequence of events has inevitably led to speculation about potential internal tensions and the company's ability to navigate its newfound prominence in AI. "The departure of top executives like CTO Mira Murati could shake things up at OpenAI," Hasan said. "It might lead to shifts in their organizational structure and decision-making processes, but they're confident in their 'great bench' of talent to keep the momentum going." Despite these challenges, OpenAI remains optimistic about its future. The company continues to emphasize its mission to make advanced intelligence widely accessible. "We aim to make advanced intelligence a widely accessible resource," the company stated in its press release. "By collaborating with key partners, including the U.S. and allied governments, we can unlock this technology's full potential." The coming months will be crucial for OpenAI as it navigates this period of transformation. The company must leverage its newfound resources while managing the transition in leadership to maintain its position at the forefront of AI innovation. OpenAI's ability to balance these challenges while continuing to push the boundaries of AI technology will be critical to its success. One thing is clear: OpenAI remains a force to be reckoned with in the AI industry. With its funding, technology, and despite the leadership changes, the company is poised to shape the future of AI.

Why OpenAI needs another $6.6 billion in VC money

Welcome to AI Decoded, Fast Company's weekly newsletter that breaks down the most important news in the world of AI. You can sign up to receive this newsletter every week here. OpenAI's product lineup and cast of executives are quickly evolving, but one thing has stayed the same-the company's need for a lot of cash. The company's main innovation -- putting massive computing power behind generative AI models -- is, by definition, expensive, given the high cost of server time and specialized chips, not to mention the expensive PhDs needed to run it all. Now the company has added another $6.6 billion to its estimated $13.5 billion in funding. Its investors believe the company to be worth $157 billion, up from its $86 billion valuation in February. The round was led by venture-capital firm Thrive Capital ($1.25 billion) and Microsoft ($1 billion), the Wall Street Journal reports. Softbank and Nvidia invested for the first time. OpenAI asked the investors not to invest in its close rivals: Anthropic, Elon Musk's xAI, and Safe Superintelligence, cofounded by OpenAI's former chief scientist Ilya Sutskever.

ChatGPT owner OpenAI valued at whopping $157B after funding from...

OpenAI has raised $6.6 billion from investors at a post-money valuation of $157 billion, the company announced on Wednesday, cementing the ChatGPT maker's status as one of the most valuable private companies in the world. The funding has attracted returning venture capital investors including Thrive Capital and Khosla Ventures, as well as OpenAI's biggest corporate backer Microsoft, and new participation from Nvidia. The closing of the funds coincides with the company's ongoing restructuring efforts and executive changes, including the abrupt departure of its longtime Chief Technology Officer, Mira Murati, last week. Altimeter Capital, Fidelity, SoftBank, Abu Dhabi's state-backed investment firm MGX also participated in the round. The funding came in the form of convertible notes, and hinges on a successful structural change into a for-profit that would no longer be controlled by the non-profit board and the removal of cap on returns for investors. The personnel changes haven't deterred enthusiasm from most investors, who are anticipating significant growth based on the projections by OpenAI CEO Sam Altman and CFO Sarah Friar. The company is on pace to generate $3.6 billion in revenue this year on mounting losses of over $5 billion. It projects major revenue jump next year to $11.6 billion, according to sources familiar with the figures. Investors have also secured some protections as OpenAI undergoes the complex corporate restructuring that would grant Altman equity. The talks are still ongoing, and no timeline has been determined yet. Investors have negotiated terms that would allow them to claw back their capital or renegotiate the valuation if the changes are not implemented within two years, sources said. OpenAI's meteoric rise in terms of product popularity and valuation has captured the world's imagination. Since the launch of ChatGPT, it has attracted 250 million weekly active users. The company's valuation has also risen from $14 billion in 2021 to $157 billion as it grew revenue from zero to $3.6 billion, far exceeding Altman's own projections at the time. The company has told investors it is still actively pursuing artificial general intelligence (AGI), meaning developing AI systems that surpass human intelligence, as it ramps up commercialization and tries to be profitable.

IT'S OFFICIAL: OpenAI is worth $157 billion

OpenAI has officially closed its latest funding round, raising more than $6.6 billion in a deal that values the startup at massive $157 billion, the company announced on Wednesday. The deal cements OpenAI's status as one of the most valuable startups in the world, only trailing behind Elon Musk's space exploration company SpaceX and TikTok owner ByteDance, according to CB Insights' list of tech company valuations. The funding comes as the artificial intelligence startup has been roiled by a string of high-level departures and internal disagreement over the company's evolution from a non-profit research lab to a producer of commercial AI products. OpenAI kicked off the generative AI boom when it introduced ChatGPT in November 2022. OpenAI's valuation has nearly doubled from its level earlier this year, when it conducted a tender offer for employees to sell some of their shares to private investors in a deal that valued the company at around $80 billion. In an email to Fortune, venture capital firm Thrive Capital confirmed it had invested and led this latest round. OpenAI didn't respond to an immediate request for comment. News of the funding round was first reported by Bloomberg on Wednesday.

OpenAI has closed new funding round raising over $6.5 billion

The deal is one of the largest-ever private investments, and makes OpenAI one of the three largest venture-backed startups, alongside Elon Musk's SpaceX and TikTok owner ByteDance Ltd.OpenAI has completed a deal to raise over $6.5 billion in new funding, giving the artificial intelligence company a more than $150 billion valuation, and bolstering its efforts to build the world's leading generative AI technology. The deal is one of the largest-ever private investments, and makes OpenAI one of the three largest venture-backed startups, alongside Elon Musk's SpaceX and TikTok owner ByteDance Ltd., according to people familiar with the matter who asked not to be identified discussing private information. The size of the investment underscores the tech industry's belief in the power of AI, and its appetite for the extremely costly research powering its advancement. The funding round was led by Thrive Capital, the venture capital firm headed up by Josh Kushner, Bloomberg previously reported, along with other global investors. The massive funding round follows a turbulent year for OpenAI. Last November, the company's board fired and then quickly rehired its chief executive officer Sam Altman. In the following months, the company has remade its board, hired hundreds of new employees and lost several key leaders, including Sutskever and chief technology officer Mira Murati.

AI Money: OpenAI Secures $6.6 Billion as Startup Poolside Nets Funding for 'Human-Level' AI | PYMNTS.com

In a whirlwind of investment activity, artificial intelligence companies secured unprecedented funding. OpenAI led the pack at a $6.6 billion raise. Poolside secured $500 million in a Series B for AI-powered software development. HPC-AI Tech raised $50 million for video generation and infrastructure. The AI gold rush is in full swing as investors bet big on the transformative potential of artificial general intelligence (AGI). OpenAI raised $6.6 billion in a funding round that values the company at $157 billion, according to a Wednesday (Oct. 2) press release. The investment positions OpenAI to accelerate its mission of developing and deploying AGI for the benefit of humanity. The San Francisco-based company, known for its ChatGPT language model, plans to use the capital to bolster its leadership in frontier AI research, expand computational capacity and enhance its suite of problem-solving tools. ChatGPT has garnered over 250 million weekly active users worldwide, transforming productivity across various industries and spawning a new generation of AI-powered applications. The investment comes amid competition in the AI sector, with tech giants and startups vying for dominance in what many consider the next frontier of technological advancement. OpenAI's valuation reflects growing investor confidence in AGI's potential to revolutionize industries and create new economic opportunities. Poolside, a startup building AI for software development, raised $500 million in a Series B funding round that closed over the summer, according to a Wednesday press release. Poolside aims to create AI capable of "human-level intelligence" in software development, the release said. It plans to use the capital to expand its AI training capabilities, having already secured 10,000 Nvidia GPUs. The funding will also go toward market expansion and the growth of the company's research and engineering teams. "Only a handful of companies will reach AGI -- and they are being forged at this very moment," Poolside CEO Jason Warner said in the release. "We believe software development will be the first broad capability where AI will reach and surpass human-level intelligence. Through our team, our applied research and a powerful revenue engine, Poolside will bring AI for software development so that anyone in the world can build." The startup's first product will be an AI-powered code assistant for developers. It also plans to create tools that will allow anyone to build software. HPC-AI Tech, a startup specializing in AI software infrastructure and video generation, secured $50 million in Series A funding, according to a Monday (Sept. 30) press release. The funding will support platform development and client-base expansion, with a goal to reach 300 customers in three years. HPC-AI Tech is known for its open-source projects Colossal-AI and Open-Sora, which have accumulated over 60,000 GitHub stars. Colossal-AI enables enterprises to scale large AI workloads, while Open-Sora focuses on efficient video generation. The company's commercial platforms, hpc-ai.com and video-ocean.com, offer AI model management and video creation capabilities, respectively. HPC-AI Tech has 50 key clients, with AWS, Alibaba, IBM, Intel and Oracle among its users. The investment reflects growing interest in AI infrastructure and generative AI technologies as companies like HPC-AI Tech address increasing demand for scalable AI solutions and video generation tools.

OpenAI Raises Billions While Pledging to Work With 'U.S. and Allied Governments'

OpenAI is now valued at $157 billion, a close read of OpenAI's statement might provide some hints about the future. OpenAI has raised $6.6 billion at a $157 billion post-money valuation, according to a statement the company posted online Wednesday. The funding round was led by Thrive Capital, which invested $1.25 billion, and included Microsoft (roughly $1 billion), SoftBank ($500 million), and Nvidia ($100 million) according to the Wall Street Journal. OpenAI was previously valued at $86 billion in February when employees were allowed to sell shares. The public statement from OpenAI about the new funding round was relatively short at just three paragraphs, but it's interesting to see what the company was highlighting in that brief announcement. The statement starts by stressing its goal was to ensure AI benefits all of humanity, the kind of declaration that recalls an old Twitter joke about getting a lot of questions already answered by your shirt. "We are making progress on our mission to ensure that artificial general intelligence benefits all of humanity," the company said. "Every week, over 250 million people around the world use ChatGPT to enhance their work, creativity, and learning. Across industries, businesses are improving productivity and operations, and developers are leveraging our platform to create a new generation of applications. And we’re only getting started." But then the statement gets into the news about the valuation and lots of buzzwords about accelerating progress, increasing compute, and building tools. "We’ve raised $6.6B in new funding at a $157B post-money valuation to accelerate progress on our mission. The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," reads the OpenAI statement. The last paragraph is arguably the most interesting, if only because the wording makes it clear OpenAI isn't just interested in working with the U.S. government, but other allied governments around the world. USAID became the first federal agency to sign a contract with OpenAI to use ChatGPT Enterprise and the Pentagon is reportedly working with the company on cybersecurity tools. "We aim to make advanced intelligence a widely accessible resource. We’re grateful to our investors for their trust in us, and we look forward to working with our partners, developers, and the broader community to shape an AI-powered ecosystem and future that benefits everyone. By collaborating with key partners, including the U.S. and allied governments, we can unlock this technology's full potential," the OpenAI statement concludes. Again, this new statement is brief when compared to a typical press release. But it could provide some clues about what the company has in store for the near future. Obviously, the folks at the Pentagon want to have the latest and greatest AI tools at their disposal, but that mention of "allied governments" certainly suggests the company is eager to work with U.S. allies as well, perhaps in the near future. Who else invested in this latest funding round? According to the Financial Times, investors include Khosla Ventures, SoftBank, Tiger Global, Altimeter Capital, and the California Public Employees’ Retirement System. But the FT notes some of those investments are through special purpose vehicles. The FT also reports that OpenAI asked investors not to back Elon Musk's artificial intelligence company xAI, founded in March 2023. Musk was a co-founder of OpenAI but was reportedly pushed out when he wanted to run the entire thing. Musk and Altman have been fighting ever since. The latest news about OpenAI's funding comes after a particularly tumultuous time for the AI venture, with CTO Mira Murati announcing her departure last week on the same day Reuters reported the company was looking to restructure from a non-profit model to a for-profit corporation. And it wasn't that long ago that CEO Sam Altman was abruptly axed by the board, only to be brought back less than a week later after pressure from OpenAI employees and Microsoft. Even elected representatives like Democratic Sen. Chuck Schumer of New York expressed their support of Altman. Why would Sen. Schumer care about who the CEO of OpenAI might be? Well, that probably brings us back to OpenAI's statement about wanting to work more with the U.S. government. And Altman may have learned a thing or two from his friend-turned-enemy Elon Musk, a billionaire who's benefited tremendously from billions in government contracts at SpaceX and massive subsidies at Tesla. There's a lot of money to be made from Uncle Sam.

OpenAI feels competitors breathing down its neck

Microsoft chief executive Satya Nadella expressed a common view in the tech industry when he said recently that large language models, the engines behind the generative AI boom, are becoming "more of a commodity". With a handful of leading model-builders vying for bragging rights with each new iteration of their AI, it is becoming hard to separate OpenAI's latest GPT from Anthropic's Claude or Google's Gemini. That makes it all the more notable that Nadella's Microsoft has just lined up behind OpenAI's latest funding round, boosting its valuation to $150bn. Will this moment be looked back on as the peak of generative AI mania? Valuing any fast-growing tech company in a new market is notoriously difficult. But the extent to which generative AI has transformed the tech landscape and the speed of OpenAI's emergence have left investors groping for yardsticks and historical comparisons. First, consider what it has built. ChatGPT, launched nearly two years ago, became a hit consumer brand almost overnight and now claims 250mn users a week. The $20 monthly subscription fee paid by a small minority has lifted its annualised revenue to $3.6bn. OpenAI could also be on the way to becoming a wider tech platform. Many other companies have integrated its AI into their own products and services. The tools it is building to make its technology more useful in the business world have given it a rare opening in the enterprise market. It is tempting to draw parallels with earlier hot start-ups, such as Google. When the search company's stock market value first hit $150bn, in 2006, it was not the clear winner in search that it went on to become, with less than half the market. Its $10bn in revenue that year was similar to the $11bn OpenAI is reported to project for next year. But it is here that the comparisons break down, and the scale of the challenge ahead for OpenAI becomes more apparent. Google was already churning out cash in 2006. OpenAI, without a functional business model, is on track to burn through more than $5bn of cash this year, with little prospect of stemming the flow in the short term. Along with the sharply escalating expense of training ever-larger models, the considerable computing power needed to respond to users' prompts will continue to weigh heavily on margins as it grows. Nor does it seem to be able to use pricing as a weapon. Although it has brought down prices rapidly to match greater efficiencies in responding to queries, the costs of querying for other LLMs that are available through the main cloud services have fallen pretty much in parallel. That points to OpenAI's biggest challenge: the lack of deep moats around its business, and the intense competition it faces. On the consumer side, Meta said last week that 500mn people are now looking at its Meta.AI at least once a month, a sign of the vast, captive markets available to OpenAI's Big Tech rivals. Google and Meta also have ready-made advertising businesses, which have proved to be the best route to monetising large-scale digital audiences. ChatGPT can point to a favoured position on the iPhone, thanks to a deal with Apple. But Apple is only making the chatbot available through its Siri assistant, and even then only for handling questions that are beyond the current capabilities of its own AI models -- hardly a recipe for long-term success as OpenAI tries to cement its early consumer gains. Competition on the enterprise side is also growing fast. Close ally Microsoft is diversifying away from its early reliance on OpenAI, while the capabilities of open source AI models have advanced rapidly, making them viable alternatives. Meta's Llama hasn't yet become "the Linux of AI", as Mark Zuckerberg suggested last week, but the risk of commodification that Nadella warned about looms large. At this point, it is worth remembering that generative AI is still in its infancy, and that the vast resources being poured into the technology could still hold big surprises and bring considerable unanticipated disruption. OpenAI's latest models hint at the potential. Its voice-powered GPT-4o has been credited with breaking new ground in naturalistic voice interaction, potentially opening up new consumer markets to AI. And it claims its GPT-o1 is the first model capable of breaking a complex problem down and reasoning its way to a solution. That could point to a future where AI models themselves take on more of the work in a business application, sucking value out of traditional software as they become more central to working life. It is impossible to tell how far capabilities like these will advance and whether OpenAI can maintain a meaningful edge in model-building. But with the most powerful companies in tech closing fast, investors backing the group at $150bn will need a strong stomach.

OpenAI Raises $6.6B in Massive Funding Round

The company announced the news in a blog post Wednesday, writing that "the new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems." The round was led by Joshua Kushner's Thrive Capital, and also includes Microsoft, Nvidia, SoftBank, Fidelity and other high-profile investors. OpenAI, of course, is arguably the most significant AI company on the planet (technically, of course, it is a non-profit). Its ChatGPT product changed the conversation around generative AI, and its Dall-E image generation software demonstrated the potential for that tech. It is also wading into the AI-generated video world with its Sora product.

Breaking: OpenAI Pulls $6.6 Bln Funding As Valuation Tops $157 Bln

Artificial Intelligence giant OpenAI has seen its valuation top $157 billion after raising $6.6 billion from investors like NVIDIA Popularizing Artificial Intelligence with the help of ChatGPT has finally paid off big for OpenAI. In a major plot twist, the firm has seen its valuation top $157 billion after it secured $6.6 billion in funding from investors. This valuation places OpenAI as one of the world's most valuable private, not-for-profit startups. As reported by Reuters, the funding came in the form of convertible senior notes. Notably, investors like Microsoft Corporation and AI giant NVIDIA participated in the funding round. The funding announcement is coming barely a week after the ChatGPT maker teased a major restructuring move. Under this plan, the firm will transition into a for-profit entity with notable leadership changing taking place simultaneously.

OpenAI secures $6.6bn investment from UAE's MGX, Nvidia

Image credit: Didem Mente/ Getty Images OpenAI, the company behind ChatGPT, has raised $6.6bn from investors, which could value the company at $157bn and cement its position as one of the most valuable private companies in the world. The funding has attracted returning venture capital investors, including Thrive Capital and Khosla Ventures, OpenAI's biggest corporate backer, Microsoft and new participation from Nvidia. The closing of the funds coincides with the company's ongoing restructuring efforts and executive changes, including the abrupt departure of its longtime chief technology officer, Mira Murati. Altimeter Capital, Fidelity, SoftBank and Abu Dhabi's state-backed investment firm MGX also participated in the round. OpenAI chief financial officer Sarah Friar told employees on Wednesday that the company will be able to provide liquidity for them through a tender offer to buy back their shares in the company following the funding, although no details and timing have been decided, according to a source. Earlier this year, the company allowed some employees to cash out their shares at a valuation of $86bn. Thrive Capital, which committed about $1.2bn from a combination of its own fund and a special purpose vehicle for smaller investors, negotiated the option to invest another $1bn next year at the same valuation if the AI firm hits a revenue goal, sources added. Apple, which was in talks to invest in OpenAI, did not end up joining the funding, sources said, who requested anonymity to discuss private matters. Apple did not immediately respond to a request for comment. The funding came in the form of convertible notes, and the conversion to equity hinges on a successful structural change into a for-profit that the non-profit board and the removal of a cap on investor returns would no longer control. The personnel changes haven't deterred enthusiasm from most investors, who are anticipating significant growth based on OpenAI CEO Sam Altman's projections. The company is on pace to generate $3.6bn in revenue this year on mounting losses of over $5bn. It projects major revenue jump next year to $11.6bn, according to sources familiar with the figures. Investors have also secured some protections as OpenAI undergoes the complex corporate restructuring that would grant Altman equity. The talks are still ongoing, and no timeline has been determined yet. Investors have negotiated terms that would allow them to claw back their capital or renegotiate the valuation if the changes are not implemented within two years, sources said. OpenAI's meteoric rise in terms of product popularity and valuation has captured the world's imagination. Since the launch of ChatGPT, it has attracted 250 million weekly active users. The company's valuation has also risen from $14bn in 2021 to $157bn as it grew revenue from zero to $3.6bn, far exceeding Altman's projections at the time. The company has told investors it is still actively pursuing artificial general intelligence (AGI), meaning developing AI systems that surpass human intelligence, as it ramps up commercialisation and tries to be profitable. Read: UAE President, US Commerce Secretary discuss MGX's $30bn AI fund

OpenAI just raised $6.6 billion to build ever-larger AI models

The funding round was led by Thrive Capital, which committed $1 billion, according to the Financial Times. It was also reported that Thrive got a special deal (not offered to other investors) that allows it to invest another $1 billion next year at the same valuation if the AI firm hits a revenue goal, Reuters reported. These funds are apparently contingent on OpenAI going through with a rumored restructure as a for-profit company. The company's for-profit wing is currently overseen by a nonprofit research body, and investor profits are capped at 100x. If OpenAI doesn't restructure itself as a for-profit company within two years, Axios reported, investors can ask for their money back. Last week, Reuters reported that the company is considering becoming a public benefit corporation (like Anthropic).

OpenAI Has Closed New Funding Round Raising Over $6.5 Billion

OpenAI has completed a deal to raise over $6.5 billion in new funding, giving the artificial intelligence company a more than $150 billion valuation, and bolstering its efforts to build the world's leading generative AI technology. The deal is one of the largest-ever private investments, and makes OpenAI one of the three largest venture-backed startups, alongside Elon Musk's SpaceX and TikTok owner ByteDance Ltd., according to people familiar with the matter who asked not to be identified discussing private information. The size of the investment underscores the tech industry's belief in the power of AI, and its appetite for the extremely costly research powering its advancement.

OpenAI raises $9.6b in funding at $228b valuation

Gift 5 articles to anyone you choose each month when you subscribe. OpenAI said it has completed a deal to raise $US6.6 billion ($9.6 billion) in new funding, giving the artificial intelligence company a $US157 billion ($228 billion) valuation, and bolstering its efforts to build the world's leading generative AI technology. The deal is one of the largest-ever private investments, and makes OpenAI one of the three largest venture-backed startups, alongside Elon Musk's SpaceX and TikTok owner ByteDance. The size of the investment underscores the tech industry's belief in the power of AI, and its appetite for the extremely costly research powering its advancement.

OpenAI Just Landed a $157 Billion Valuation

OpenAI has raised $6.6 billion in what is understood to be the largest venture capital funding round of all time. The company was valued at an eye-popping $157 billion. OpenAI said in a statement that the $6.6 billion "will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems." The round was led by Josh Kushner's Thrive Capital, and also included SoftBank and tech giants Microsoft and Nvidia. The funding round surpasses the record for the largest VC round previously held by Elon Musk's xAI, which raised $6 billion in May 2024. Since the start of 2024, when OpenAI allowed employees to sell shares at a $86 billion valuation, the company's valuation has nearly doubled. OpenAI's last major fundraise was in January 2023, when Microsoft invested $10 billion in the company. According to multiple reports, the terms of the new round dictate that OpenAI has two years to transition from a nonprofit into a for-profit business. If the company hasn't made the change within the timeframe, investors will have the right to withdraw their money.

OpenAI Valuation Soars To $157B In Latest Funding Round - Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL)

OpenAI raises $6.6 billion at a post-money valuation of $157 billion to accelerate progress on AI. OpenAI has secured more than $6.5 billion in new funding at a valuation of $157 billion as it looks to increase its lead in the artificial intelligence space. What Happened: OpenAI on Wednesday announced that it raised $6.6 billion at a post-money valuation of $157 billion to accelerate progress on AI research, increase compute capacity and continue building tools to solve complex problems. OpenAI was valued around $86 billion earlier this year when employees opted to offload existing shares. "Across industries, businesses are improving productivity and operations, and developers are leveraging our platform to create a new generation of applications. And we're only getting started," the AI company said in a statement. OpenAI's ChatGPT is the fastest-growing consumer application in history, as it was estimated to have reached 100 million monthly active users within two months of launch. The company was seeing an average of about 13 million unique visitors per day at that time, per Reuters. OpenAI said Wednesday that more than 250 million people across the globe are currently using ChatGPT daily to enhance their work, creativity and learning. See Also: OpenAI's SearchGPT Set To Disrupt Google's Search Empire As Former Engineer Sounds Alarm On Deteriorating User Experience Amid Rising Competition Why It Matters: According to a Bloomberg report citing people familiar with the matter, OpenAI's new funding deal is one of the largest private investments ever alongside SpaceX and TikTok parent ByteDance. The funding was reportedly led by Thrive Capital. Previous reports suggested the venture capital firm would invest at least $1 billion. OpenAI was also reportedly in funding talks with Apple Inc AAPL, Nvidia Corp NVDA and Microsoft Corp MSFT. Apple ended up pulling out of discussions early, but separate reports suggested SoftBank was looking to step into the deal. Microsoft has been the main backer of OpenAI to date, having invested $13 billion in the AI company over the past five years. Read Next: After Apple Reportedly Backed Out, SoftBank Eyes $500M Investment In ChatGPT Parent, Pushing Valuation To $150B Photo: Shutterstock Market News and Data brought to you by Benzinga APIs

How Does OpenAI's Price Tag Stack Up to Survivors of the Dotcom Bubble?

OpenAI is forecast to lose $5 billion this year as revenue growth has failed to offset the immense costs of training and running AI models. OpenAI's latest fundraising round has made the ChatGPT maker one of the world's most valuable startups, and an unusually costly investment from a historical perspective. On Wednesday, Microsoft (MSFT)-backed OpenAI completed a $6.6 billion fundraising round that valued the nonprofit startup at the center of the Artificial Intelligence (AI) craze at more than $150 billion, nearly double its valuation just a few months ago. If OpenAI were a public company in the S&P 500, it would be among the index's 70 largest components and have a market value roughly equivalent to that of AT&T (T) and Pfizer (PFE). But OpenAI, if it was a public company, wouldn't be eligible for the S&P 500 because it's never been profitable. Nor have many of its major competitors like Amazon (AMZN)-backed Anthropic, Elon Musk's xAI, or Safe SuperIntelligence (SSI), the organization born out of the recent schism between OpenAI and its former chief scientist Ilya Sutskever. The valuations of AI startups have skyrocketed this year as they've attracted billions of dollars in investment from tech giants and venture capital firms. Anthropic is in the midst of a fundraising round and is expected to be valued at as much as $40 billion. xAI has been valued at $24 billion and SSI is worth an estimated $5 billion just three months after its founding. These unprofitable firms trade at a high multiple. A Deutsche Bank analysis estimates Anthropic is likely to be valued at 50 times its full-year sales, while OpenAI is valued at almost 40x sales. At the height of the dotcom bubble, Microsoft's and Oracle's (ORCL) price-to-sales ratios peaked around 30. Their valuations also dwarf those of America's largest tech companies. Nvidia (NVDA), expected to book $90 billion in profit in the next year, trades at 30x annual sales. Apple (AAPL) and Microsoft, two of the most profitable companies in the world, trade at price-to-sales ratios in the low teens. OpenAI was founded as a nonprofit organization with a for-profit arm through which investors can stake a claim to future profits. Last month, reports emerged that the company was planning to convert to a for-profit company, and its latest fundraising reportedly made the investments conditional on its completing that conversion in the next two years. Even so, it could be a while before the company does turn a profit. OpenAI as a whole is expected to lose $5 billion this year, according to analyses by The New York Times and The Information. The number of monthly users of its chatbot ChatGPT, OpenAI's main source of revenue, more than tripled between March and June of this year, and ChatGPT's revenue is expected to quadruple to $2.7 billion this year. But those users come at a high cost -- renting the servers to run ChatGPT will cost an estimated $4 billion this year. Growing revenue will be vital to the profitability of OpenAI, and the company has set ambitious goals for itself. According to documents reviewed by the Times, the company expects to grow sales from nearly $4 billion this year to $11.6 billion in 2025. It's targeting $100 billion in revenue in 2029, which would require a compound annual growth rate (CAGR) of more than 90% over the next five years. By comparison, analysts forecast Nvidia's revenue will grow at a CAGR of 33% through 2026.

OpenAI nearly doubles its valuation to receive $6.6 billion funding

Artificial intelligence (AI) company OpenAi has finalized a deal to raise $6.6 billion in funding from investors. The deal values the company at a whopping $157 billion, making it one of the most valuable private companies in the world. The funding round also saw participation from OpenAI's biggest backer Microsoft, and chips giant Nvidia, apart from other venture capital investors. With the closure of funding round, OpenAI also seems to have finalized its restructuring plans. This could lead to founder Sam Altman becoming a stakeholder in the company.

OpenAI raises $6.6 billion in largest VC round ever

Driving the news: Joshua Kushner's Thrive Capital led the round, and was joined by Microsoft, Nvidia, SoftBank, Khosla Ventures, Altimeter Capital, Fidelity and MGX. The big picture: OpenAI is effectively transforming from a nonprofit lab to a product-focused company -- a move that has attracted investors, but likely contributed to an exodus of many long-term employees. What they're saying: "The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," OpenAI said in a blog post. The bottom line: OpenAI continues to grow its revenue, but the giant investment reflects how its costs are also rising,