OpenAI has raised $6.6 billion in funding, which increases the company’s value to $157 billion, making it among the most valuable private companies in the world.
The funding was sponsored by Microsoft, Nvidia, Thrive Capital, Altimeter Capital, SoftBank, and Abu Dhabi’s MGX. The success of this round of funding shows investor confidence in the artificial intelligence company despite instability at its higher ranks, as Chief Technology Officer Mira Murati recently left.
OpenAI restructuring
OpenAI’s funding should only increase as it restructures from a non-profit governed entity to a for-profit company. Making this transition allows OpenAI to remove caps on investor returns.
Not only will the transition to for-profit benefit investors, but it will also benefit the company itself. While OpenAI’s funding so far has allowed them to see some revenue, they have also lost a lot of money. The artificial intelligence company has lost about $5 billion, building ChatGPT and working on generative AI.
The Chief Financial Officer of OpenAI, Sarah Friar, announced to employees on Wednesday that they will have liquidity options in the company as part of a buyback program that accompanies this latest round of funding.
OpenAI funding
The latest OpenAI funding round comes after BlackRock and Microsoft launched an AI fund. The funding seeks to improve AI infrastructure so the technology can advance without financial obstacles that could stunt its growth.
Most of the financing from this round was comprised of convertible notes. These convertible notes can be converted into stock once the company’s for-profit restructuring is officially completed. If the restructuring is not completed within two years, the investors have a clause allowing them to renegotiate their funding.
Thrive Capital provided the most funding to OpenAI in this round at about $1.2 billion. They also included a clause in the deal that could see them invest another $1 billion in OpenAI if they hit specific revenue benchmarks. The massive amount of funding shows investors’ faith in artificial intelligence and their confidence in OpenAI.
OpenAI took the world by storm when it launched ChatGPT. ChatGPT has over 250 million weekly users and is the leading AI program in the world. The release of ChatGPT launched CEO Sam Altman’s company to the forefront of the artificial intelligence scene. The company was initially valued at around $14 billion and has skyrocketed to $157 billion, surpassing Altman’s expectations.
Funding for OpenAI will only increase as investor excitement over generative AI continues. OpenAI confirmed to investors that they are continuing work on the intelligence systems required for generative AI and potentially commercializing a service using the technology one day.
