OpenAI's $6.6B boost pushes valuation to $157 billion
OpenAI, the creator of ChatGPT, received $6.6 billion in its latest funding round. The funds were raised from companies including Microsoft and Nvidia. The company's valuation could reach a staggering $157 billion, placing OpenAI among the most valuable private enterprises worldwide.
9:41 PM EDT, October 3, 2024
The funding round also included other significant entities such as Altimeter Capital, Fidelity, SoftBank, and MGX, a sovereign investment fund from Abu Dhabi. Thrive Capital invested $1.2 billion, with an option for an additional billion next year. Notably, Apple, despite earlier speculation, decided not to participate in this funding round, Bloomberg reports.
Artificial intelligence in demand
Securing such significant capital coincides with major organizational changes at OpenAI. The company is undergoing restructuring and experiencing shifts in key positions, as shown by the recent departure of its long-time Chief Technology Officer, Mira Murati. Despite these challenges, investors remain enthusiastic, with their expectations heavily influenced by the forecasts presented by Sam Altman, the CEO of OpenAI.
The company's financial projections are impressive. OpenAI predicts achieving revenues of $3.6 billion this year, with losses exceeding $5 billion. A significant revenue increase to $11.6 billion is projected for 2024. These ambitious financial goals reflect the company's dynamic growth, which has seen its valuation increase from $14 billion in 2021 to the current $157 billion in just a few years.
OpenAI continues its work on artificial general intelligence (AGI), aiming to create AI systems that surpass human intelligence. At the same time, the company is intensifying its commercialization efforts, striving for profitability. The popularity of OpenAI's products is compelling, with ChatGPT currently attracting 250 million active users weekly.
Transaction details
The secured funding structure is based on convertible bonds. The conversion to equity is contingent upon the successful transformation of OpenAI into a profit-oriented entity, which involves relinquishing control exercised by the non-profit organization's board and removing the return cap for investors. Negotiations on this matter are ongoing, although specific timelines have not yet been established.
Investors have protected their interests by negotiating clauses that allow them to recover their invested capital or renegotiate the valuation if the planned structural changes aren't implemented within two years. Additionally, OpenAI plans to enable employees to monetize their shares in the company through a stock buyback offer, although details and timelines for this operation have not yet been set.
