OpenAI CEO Sam Altman. Photo / Getty Images
OpenAI has finalised a deal to receive US$6.6 billion ($10.56b) in new funding from investors who valued the company at US$157b – the latest in a series of dramatic and sometimes polarising moves for the ChatGPT maker.
The firm was last valued at US$86b earlier this year. The Wall Street Journal reported the round was led by ThriveCapital, which is putting US$1.25b into the company and supported by Microsoft, which put in “a little less than US$1 billion”, Softbank (US$500 million) and Nvidia (US$100m).
The deal anoints the artificial intelligence (AI) 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 chief executive Sam Altman.
Some investors on Wall Street and in Silicon Valley have expressed concern that huge spending on data centres and chips to power AI projects will be difficult to recoup in the form of profits.
“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.
In a statement, OpenAI’s chief financial officer, Sarah Friar, said: “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.”
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, Khosla Ventures 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 super-intelligent AI that would benefit all humanity. But it set up a commercial division in 2019 and took investment from Microsoft and others, describing it as the only way to secure the resources needed to fuel AI’s insatiable need for semiconductor chips and the energy to power data centres.
The company has raised multiple rounds of funding since it launched ChatGPT in late 2022 – including upward of US$10b from its key partner, Microsoft. Some employees and early investors have been given the opportunity to cash out by selling their shares.
OpenAI’s massive new funding round marks a new phase for the San Francisco-based artificial intelligence company, 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 how to develop AI safely, corporate concentration of power over the technology, or investment from authoritarian regimes.
The company has several significant challenges ahead despite the freedom provided by billions of dollars of new investment.
OpenAI is considering restructuring into a for-profit benefit corporation free from the control of the current nonprofit board, according to people familiar with the discussions who spoke on the condition of anonymity to share confidential information. Although the company’s announcement on the new funding did not address any structural changes, Altman has talked with the board about receiving an equity stake in a restructured company.