OpenAI has finished its funding round, raising $6.6 billion, which brings its valuation to an impressive $157 billion. The funding round, which was perhaps one of the largest in the history of humanity, was left by Thrive Capital, with significant contributions from Microsoft, Nvidia, and SoftBank.
The funding was structured as convertible debt which allows investors to convert their investments into equity if OpenAI transitions to a for-profit model within two-years. If this transition doesn't occur, investors have the option to reclaim their contributions. Thrive Capital has also made a unique arrangement that allows it to inject an additional $1 billion next year, provided that OpenAI meets specific revenue targets.
The funding was necessary for OpenAI as it is looking to enhance its computing capabilities and develop more advanced AI models. The company has a great growth trajectory, with monthly revenues reaching $300 million in August and projections estimating annual sales of $11.6 billion for 2025. However, despite the growth, OpenAI is expected to incur losses of about $5 billion this year due to the high costs associated with training complex AI models.
Nevertheless, OpenAI's current valuation now places it among the top three venture-backed startups globally, alongside SpaceX and ByteDance. The company valuation has increased rapidly—from just $14 billion in 2021—reflecting the increasing demand for AI tech in various industries. As of now, OpenAI has over 250 million active users weekly.
OpenAI will continue to transition to a for-profit entity as previously announced and become a public benefit corporation, similar to other AI firms like Anthropic. The company is also planning to remove profit caps for investors, which was part of its deal to get the funding. However, the company still has to face internal challenges related to its executive turnover and maintaining its commitment to developing a safe AGI, as it used to say when a non-profit governed it.
Via Reuters
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