OpenAI, the artificial intelligence firm behind ChatGPT, has secured a whopping $6.6 billion (£5.0 billion) investment, potentially valuing the company at $157 billion and solidifying its status as one of the globe’s most valuable private companies. Returning investors such as Thrive Capital and Khosla Ventures, alongside Microsoft – OpenAI’s largest corporate supporter – and new entrant Nvidia, were among the investors in this funding round.
This influx of funds lines up with OpenAI’s ongoing organisational restructuring efforts and leadership transitions, marked by the sudden exit of Mira Murati, the company’s long-serving chief technology officer, last week. Various firms, including Altimeter Capital, Fidelity, SoftBank, and Abu Dhabi’s state-sponsored investment firm MGX, also took part in the funding exercise.
The round also saw commit of approximately $1.2 billion from Thrive Capital through a blend of its own fund and a smaller investor-specific special purpose vehicle. Thrive also obtained an option for an additional $1 billion investment at current valuation next year, should OpenAI achieved a stipulated revenue target.
Earlier plans for Apple to invest in OpenAI fell through, as disclosed by anonymous sources. The investment was structured as convertible notes, with conversion to equity reliant on OpenAI successfully transitioning into a profit-oriented entity, independent of non-profit board control and eliminating investment return caps.
Despite the personnel shifts, most investors’ excitement remains unscathed, forecasting considerable growth driven by predictions from OpenAI CEO Sam Altman and CFO Sarah Friar. OpenAI anticipates $3.6 billion in annual revenue despite estimated losses exceeding $5 billion, with revenue projected to soar to $11.6 billion the following year.
As OpenAI navigates intricate organisational restructuring that could result in equity for Altman, measures have been put in place to safeguard investors’ interests. Negotiations are ongoing and there is no fixed timeline yet. However, investors have negotiated conditions that would enable them to recover their capital or reassess the valuation if the anticipated changes are not executed within a two-year span.
OpenAI, the artificial intelligence company, has seen an extraordinary growth in product popularity and value, capturing global attention. After the introduction of ChatGPT, the company now boasts a remarkable 250 million active users on a weekly basis. Over time, OpenAI’s value skyrocketed from $14 billion in 2021 to an impressive $157 billion, far outpacing the initial projections made by Altman, with the revenue rising from nothing to $3.6 billion.
Despite the pursuit of profitability and rapid commercialisation, OpenAI has communicated to its investors that it is steadfast in its pursuit of artificial general intelligence (AGI). AGI refers to the development of AI systems that can outperform human intelligence. – Reuters
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