OpenAI soars to $80 billion valuation in latest deal

OpenAI has closed a deal that values the Microsoft-backed company at a staggering $80 billion or even more, nearly tripling its valuation in less than 10 months, according to an exclusive report from the New York Times. This marks a significant jump from its valuation of $29 billion in June 2023, underscoring the growing interest and financial backing in the AI sector.

The deal involves the sale of current shares through a “tender offer” led by venture firm Thrive Capital, the New York Times reported on Friday, citing sources familiar with the details of the transaction.

Unlike traditional funding rounds where new shares are issued to raise funds, this approach allows existing employees to sell their shares. Microsoft, a major supporter since 2019 with a $1 billion investment, continues to play a crucial role in shaping OpenAI’s future.

The deal also allows employees to cash out their shares in the company, departing from the usual method of raising funds to infuse capital into the business.

“OpenAI has completed a deal that values the San Francisco artificial intelligence company at $80 billion or more, nearly tripling its valuation in less than 10 months, according to three people with knowledge of the deal,” the New York Times reported.

The substantial valuation mirrors the enthusiasm surrounding OpenAI’s advancements in large language models and other AI tools. Their technology has captivated imaginations, finding applications in diverse fields such as text generation, translation, and code writing. This deal can be interpreted as a vote of confidence in OpenAI’s commitment to developing AI responsibly for a positive impact.

OpenAI struck a similar deal in the earlier part of last year. The venture capital firms Thrive Capital, Sequoia Capital, Andreessen Horowitz, and K2 Global agreed to purchase OpenAI shares through a tender offer, which valued the company at approximately $29 billion, as detailed in the report.

The news of the deal comes just a week after OpenAI CEO Sam Altman was reportedly planning to raise up to $7 trillion in new funding following a $5 billion investment in R&D to advance semiconductor technologies made in the USA. The unprecedented investment is part of Altman’s ambitious move aimed at expanding the global supply of AI chips.

Last Thursday, OpenAI unveiled its latest creation, Sora, a video AI model that lets users create 60-second videos based on brief text prompts. The creator of the popular ChatGPT said that Sora is capable of translating textual directives into dynamic visual narratives, complete with diverse characters, specific movements, and intricate background settings.

Funded in 2015 by Sam Altman and Elon Musk, OpenAI started as a non-profit research institution aimed to pave the way for safe and beneficial artificial general intelligence (AGI). However, in 2020, it transitioned into a commercial entity, marking a significant shift in its trajectory. Despite internal disruptions in November, including Altman’s temporary departure and subsequent return, the company remains at the forefront of the burgeoning AI market, spurred by the successful launch of ChatGPT in 2022.