OpenAI eyes $100 billion+ valuation in new funding round

OpenAI is reportedly in talks to raise funds at a valuation of more than $100 billion, significantly higher than its previous $86 billion valuation, the Wall Street Journal said on Wednesday. Investors include venture capital firm Thrive Capital and Microsoft, marking OpenAI’s largest capital infusion since Microsoft’s nearly $10 billion investment in January of last year.

While OpenAI’s revenue surpassed $3.4 billion earlier this year, the company is projected to face losses nearing $5 billion by the end of the year. So far, OpenAI has spent $8.5 billion on AI training and staffing, which has fueled the company’s rapid growth and positioned it as the most highly valued AI startup to date.

Thrive Capital is leading this new round of funding with an investment of approximately $1 billion, and Microsoft is expected to contribute as well. However, details on other potential participants in the round remain unclear. Existing backers of OpenAI include Khosla Ventures, Infosys, and Y Combinator.

“OpenAI is in talks to raise several billion dollars in a new funding round that would value the startup behind ChatGPT above $100 billion. Venture-capital firm Thrive Capital is leading the round and will invest about $1 billion, according to people familiar with the matter. Microsoft is also expected to put in money,” the Journal reported.

This round of financing is expected to be OpenAI’s largest since Microsoft’s major investment in January 2023. Despite its strong revenue growth, OpenAI is facing significant financial challenges, as it continues to invest heavily in AI development and scaling its operations.

Meanwhile, the current fundraising efforts pale in comparison to the $7 trillion in new funding that OpenAI CEO Sam Altman reportedly aimed to secure in February. This massive investment was part of Altman’s bold strategy to significantly boost the global supply of AI chips.

Founded in 2015 by Sam Altman and Elon Musk, OpenAI began as a nonprofit research organization dedicated to advancing safe and beneficial artificial general intelligence (AGI). However, in 2020, it transitioned into a commercial entity, marking a pivotal change in its path. Despite facing internal turmoil in November, including Altman’s brief departure and subsequent return, OpenAI continues to lead the dynamic AI market, driven by the success of its flagship product, ChatGPT, launched in 2022.