OpenAI closes record US$6.6b raising, hits US$157b valuation
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The news: OpenAI completed its USD6.6 billion ($9.59 billion) funding round, in the largest VC deal ever, nearly doubling its valuation in just months to become one of the three largest venture-backed startups alongside SpaceX and ByteDance.
The numbers: The deal values the company behind ChatGPT at USD157 billion, post-investment, up from a USD86 billion valuation in a tender offer to employees earlier this year.
Employees will again get the chance to sell some of their shares in the startup through a new tender offer following the record fundraising, The Information reported citing a staff memo.
The round was led by Thrive Capital with a USD1.2 billion check and an option for an additional USD1 billion investment next year at the same valuation if OpenAI hits its revenue goal, according to Reuters.
As part of the deal, OpenAI discussed awarding CEO and co-founder Sam Altman an equity stake worth over USD10 billion, according to Bloomberg, though the company has denied it has discussed specific numbers.
Candidate investors were required to commit a minimum USD250 million to be granted access to OpenAI’s financial documents, The Wall Street Journal reported, with Apple engaging in talks but ultimately not joining the round.
Other investors included Nvidia, Microsoft, SoftBank, Khosla Ventures, Altimeter Capital, Fidelity and Abu Dhabi’s state-backed MGX, according to reports.
OpenAI is expected to generate USD3.6 billion in revenue but face a USD5 billion loss this year. It projects a major revenue jump next year to USD11.6 billion, Reuters reported citing sources.
The context: The new funding will help OpenAI increase its computing capacity and drive forward AI research, it said in a statement.
The closing comes days after the abrupt departure of its longtime Chief Technology Officer Mira Murati, amid ongoing restructuring efforts to shift from a nonprofit to a for-profit model.
As part of the deal, investors secured terms allowing them to renegotiate the valuation or claw back their investments if OpenAI doesn't complete its for-profit transition within two years, Axios and Reuters reported.
What they 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 in a statement.
"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 sources: OpenAI statement, Bloomberg, Reuters, The Wall Street Journal, Axios
