A NEW AI Investment for the Unicorn!
On October 2 (Reuters) – OpenAI, the creator of ChatGPT, has raised $6.6 billion in funding from investors, potentially valuing the company at $157 billion, solidifying its status as one of the most valuable private companies globally. The funding attracted notable venture capital firms such as Thrive Capital and Khosla Ventures, alongside OpenAI’s primary corporate backer Microsoft, and new involvement from Nvidia.
This funding comes amid OpenAI’s ongoing corporate restructuring and leadership shifts, including the unexpected exit of longtime Chief Technology Officer Mira Murati last week.
Other participants in the funding round include Altimeter Capital, Fidelity, SoftBank, and Abu Dhabi’s state-backed MGX. OpenAI’s CFO, Sarah Friar, informed employees that following this funding round, the company may offer a buyback of their shares through a tender offer, although specific details and timing are still pending. Earlier this year, some employees were able to sell shares based on an $86 billion valuation.
Thrive Capital, which committed around $1.2 billion through its own fund and a special purpose vehicle, negotiated the option to invest another $1 billion next year if OpenAI meets certain revenue targets. Although Apple was reportedly in talks to invest, it ultimately did not participate in this round.
The investment was made through convertible notes, and their conversion to equity will depend on OpenAI’s shift to a for-profit structure, which would involve changes to its governance and lifting the cap on investor returns.
Despite leadership changes, investor confidence remains high, driven by optimistic revenue projections from CEO Sam Altman. OpenAI is expected to generate $3.6 billion in revenue this year, with losses exceeding $5 billion, but forecasts suggest a significant jump to $11.6 billion in revenue next year.
Investors have also negotiated terms to protect their capital in case the company’s restructuring is not completed within two years, allowing them to renegotiate the valuation or recover their investment.
OpenAI’s remarkable rise in both product popularity and valuation has captured global attention. Since the launch of ChatGPT, the company has reached 250 million weekly active users, with its valuation increasing from $14 billion in 2021 to $157 billion, driven by revenue growth far exceeding initial projections.
OpenAI remains committed to developing artificial general intelligence (AGI) as it scales up its commercialisation efforts and aims for profitability.
Src: https://www.reuters.com.
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