OpenAI in Discussions to Secure New Funding at a Valuation of $100 Billion or Higher
According to insiders, OpenAI is currently engaged in preliminary talks to secure a new funding round, with a potential valuation surpassing $100 billion. If successful, this deal would solidify OpenAI’s position as one of the most valuable startups globally, given its creation of ChatGPT.
Investors who may participate in the fundraising round have been included in the preliminary discussions, who asked for their identity to discuss private matters. Details such as the funding round’s terms, valuation and timing are not yet out and could still change, the people said.
If the funding round goes as planned, it would make the artificial intelligence darling the second-most valuable U.S. startup, behind only Elon Musk’s Space Exploration Technologies Corp., according to CBInsights data.
OpenAI declined to comment.
The company is scheduled to launch a separate tender offer in early January that would allow employees to sell $86 billion worth of their stock, Bloomberg previously reported. It is led by Thrive Capital and there was more demand from investors than available, people familiar with the matter have said.
OpenAI’s wild appreciation reflects the artificial intelligence frenzy it sparked a year ago with the release of ChatGPT, a chatbot capable of composing eerily human sentences and even poetry in response to simple prompts. The company became Silicon Valley’s hottest startup, raising $13 billion so far from Microsoft Corp., spurring renewed appreciation for the promise of artificial intelligence, which changed the tech industry landscape in a matter of months.
Amazon.com Inc. and Alphabet Inc. have since poured billions into OpenAI rival Anthropic. Salesforce Inc. led a $4.5 billion investment in Hugging Face, and Nvidia Corp., which makes many of the semiconductors used in artificial intelligence tasks, said earlier this month it had made more than two dozen investments in 2023.
OpenAI has also held discussions with Abu Dhabi-based G42 to raise funding for a new chip company, according to people familiar with the matter.
The startup has been in talks to raise $8 billion to $10 billion from G42, said one of the people, all of whom requested anonymity to discuss confidential information. It’s unclear whether the chip ventures are connected to broader corporate funding efforts.
OpenAI CEO Sam Altman had been looking for capital for a chip manufacturing project, codenamed Tigris. The goal is to produce semiconductors that can compete with Nvidia, which currently dominates the AI chip market, Bloomberg News reported last month.
In October, G42 announced a partnership with OpenAI “to deliver state-of-the-art AI solutions to the UAE and regional markets.” No financial information was provided. Founded in 2018, the company is headed by Sheikh Tahnoon bin Zayed Al Nahyan, UAE National Security Advisor and Chairman of the Abu Dhabi Investment Authority.
OpenAI’s future looked uncertain for a while after Altman was suddenly fired by its board earlier last month. At the time, some investors considered reducing their stake to zero. But after five days of leadership turmoil, Altman was brought back and a new board named. The company has tried to communicate to customers that it will refocus on its products after the upheaval.
