OpenAI Valued at $157B in New Funding Deal

OpenAI Raises $6.6 Billion, Valuing Company at $157 Billion

OpenAI, the company behind ChatGPT, has raised $6.6 billion (AED 24.4 billion) from investors, valuing the company at $157 billion (AED 576 billion) and cementing its position as one of the world’s most valuable private companies.

In addition to a new partnership from Nvidia, the fundraising attracted returning venture capital investors, including Thrive Capital, Khosla Ventures, and Microsoft, the largest corporate backer of OpenAI.

The closing of the funds coincides with the company’s ongoing restructuring efforts and executive changes, including the sudden departure last week of longtime chief technology officer Meera Muratti.

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 could provide liquidity through a tender offer to buy back their shares in the company following the funding, although details and timing have not been decided. . Earlier this year, the company allowed a select employees to cash out their $86 billion (Dh315 billion) worth of shares.

After raising about $1.2 billion (Dh4.4 billion), Thrive Capital is in negotiations to invest $1 billion (Dh3.6 billion) at the same level the following year.
. Thrive Capital combined its own fund with a special purpose vehicle for smaller investors.
The AI ​​firm is meeting a revenue target, the sources added.

Apple, which was in talks to invest in Open AI, did not end up joining the funding, said the sources, 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, with the conversion to equity dependent on a successful structural change to a for-profit that would no longer be controlled by a non-profit board, removing the cap on returns to investors.

The personnel changes haven’t stopped excitement from most investors, who expect significant growth based on OpenAI CEO Sam Altman’s predictions.

The company is on pace to post $3.6 billion (Dh13.2 billion) in revenue this year amid widening losses of $5 billion (Dh18.3 billion).Next year, it anticipates a sharp increase in revenue to $11.6 billion (Dh42.6 billion).

A portion of the protection afforded to investors throughout OpenAI’s intricate corporate reorganization has also come from Altman Equity. There is currently no timetable in place, and negotiations are still going on.

Sources said terms have been negotiated that would allow investors to return their capital or renegotiate the valuation if changes are not implemented within two years.

OpenAI’s meteoric rise in product popularity and valuation has captured the imagination of the world. Since its launch, ChatGPT has attracted 250 million weekly active users. The company’s valuation rose from $14 billion (Dh51 billion) to $157 billion (Dh576 billion) in 2021, with revenue growing from zero to $3.6 billion (Dh13.2 billion).

The company told investors it is still actively pursuing artificial general intelligence (AGI), which means developing AI systems that surpass human intelligence, as it ramps up commercialization and seeks to turn a profit.