Microsoft initially invested in OpenAI in 2019. Later, in 2023, Microsoft significantly extended its partnership and investment. Although Microsoft didn't specify the exact amount, it revealed that it made a multi-year, multi-billion dollar investment. Various reports suggest that Microsoft's investment could exceed $10 billion.
Today, the Wall Street Journal reported that Microsoft is planning to participate in OpenAI's latest funding round. The AI startup aims to raise several billion dollars and surpass $100 billion in valuation. Popular VC firm Thrive Capital will lead the round and invest about $1 billion in OpenAI.
OpenAI's most recent valuation was $86 billion late last year when its employees sold existing shares. The WSJ report also mentioned that one or more current OpenAI stockholders have been negotiating to sell their shares at a price that would value OpenAI at $103 billion. Therefore, the new funding round's valuation is expected to be even higher.
Raising capital is crucial for OpenAI since developing multi-modal AI models demands billions of dollars. Despite its popularity, OpenAI is not yet profitable. It loses billions of dollars annually to serve ChatGPT to hundreds of millions of users. Moreover, it spends billions to provide cutting-edge models to developers via APIs. Recently, OpenAI and Google have engaged in a price war, marked by significant reductions in language model API prices from both companies.
Last month, Microsoft informed OpenAI that it was relinquishing its observer seat on OpenAI's board. Additionally, it hired the Inflection AI team to develop its own AI offerings, including Copilot, to compete with OpenAI's ChatGPT. Despite these developments, Microsoft's decision to further invest in OpenAI demonstrates its confidence in its technology and roadmap. The AI landscape is evolving rapidly, and it will be fascinating to witness the future innovations from both Microsoft and OpenAI.
3 Comments - Add comment