OpenAI has secured $40 billion in new funding, the largest private fundraising round for a tech company ever. The fundraising, which was led by Japan’s SoftBank Group, values OpenAI at $300 billion.
SoftBank is contributing the lion’s share, cited as 75% in one report and $7.5 billion of an initial $10 billion investment in another. Other investors in the round include Microsoft, Coatue Management, Altimeter Capital and Thrive Capital.
The investment plan includes an initial $10 billion, while the other $30 billion is conditional on OpenAI shifting to a for-profit corporation model before this year ends. Failure to meet this requirement could potentially jeopardize a large portion of the entire deal.
This investment capital is committed to supporting OpenAI’s objectives, such as establishing its artificial intelligence research, expanding its computational and infrastructure capacities, and extending its product line, which the company states has 500 million weekly active users after a major update to AI image generation in ChatGPT. OpenAI publicly stated that its long-term purpose is to build artificial general intelligence (AGI) for broad human benefit.
The latest funding round is a major increase from OpenAI’s previous valuation. In October, the company completed a $6.6 billion funding round at a valuation of $157 billion. CNBC stated that the new $40 billion investment is one of the largest funding rounds for a private technology company ever.
Despite the popularity of ChatGPT, OpenAI is still not profitable. The company is projecting $12.7 billion in revenue this year, from $3.7 billion in annualized recurring revenue last year. It’s not expected to turn cash flow positive, however, until 2029 when it’s forecasting $125 billion in annual revenue.
The funding comes at the same time as other OpenAI initiatives, including the Stargate project – a reported $500 billion joint investment with partners such as SoftBank and Oracle to develop massive networks of data centers to host AI workloads. OpenAI has also recently announced user growth milestones and release schedules for new AI models.
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Source: https://www.neowin.net/news/openai-secures-40-billion-investment-reaching-300-billion-valuation/
