OpenAI in Talks for Major Funding Round Valuing Company at $150 Billion
OpenAI is currently engaged in discussions to secure approximately $6.5 billion in funding, which could elevate the company’s valuation to around $150 billion. This represents a significant increase of nearly $70 billion from its valuation just nine months ago, according to five individuals familiar with the negotiations.
If successful, this funding round would position OpenAI as one of the most valuable private companies globally, second only to ByteDance, the parent company of the popular video-sharing app TikTok. Just last week, OpenAI was reportedly aiming to raise around $1 billion at a valuation of $100 billion.
The upcoming funding round is expected to be spearheaded by Thrive Capital, an investment firm that has previously invested in OpenAI. Additionally, prominent tech giants such as Apple, Nvidia, and Microsoft have also been involved in the discussions, as per sources who chose to remain anonymous due to the sensitive nature of the talks.
Earlier reports by Bloomberg shed light on these new valuation discussions.
OpenAI catalyzed the artificial intelligence boom in late 2022 with the launch of its flagship online chatbot, ChatGPT. This innovation triggered a global funding surge for startups developing similar technologies. However, interest in such companies waned this past summer as many struggled to compete with larger, more established A.I. firms like Google, Microsoft, and Amazon.
The company has also faced challenges in rebuilding its reputation following a dramatic boardroom incident in late 2023, where four board members unexpectedly ousted the chief executive, Sam Altman. Remarkably, Altman was reinstated just five days later, but the turmoil resulted in the departure of several key personnel, including Ilya Sutskever, the chief scientist and co-founder.
Despite these setbacks, OpenAI, which boasts a workforce of over 1,700 employees, has made significant strides by hiring more than 1,000 new staff members and launching increasingly advanced versions of ChatGPT and related technologies, including innovative systems capable of generating images and videos.
Mr. Altman, well-regarded in Silicon Valley for his exceptional fundraising skills, has effectively generated excitement among investors regarding potential opportunities to acquire stakes in OpenAI. His approach typically involves conducting an annual tender offer to sell existing shares, which benefits the company’s employees and subsequently complements this with a traditional funding round to bolster OpenAI’s business, according to an insider familiar with Mr. Altman’s strategy.
Last year, as he concluded a tender offer that valued the company at over $80 billion, he was already informing investors of his plans to pursue funding to increase the valuation to $100 billion.
In a separate note, it should be mentioned that The New York Times filed a lawsuit against OpenAI and Microsoft in December, alleging copyright infringement related to news content utilized in A.I. systems.
This is a developing story. Please check back for updates.
