OpenAI closes $6.6 billion financing with investments from Microsoft and Nvidia

OpenAI, the company behind ChatGPT, has raised $6.6 billion from investors, which could value the company at $157 billion and cement its position as one of the most valuable private companies in the world.

He The funding has attracted returning venture capital investors. including Thrive Capital and Khosla Ventures, as well as Microsoft, OpenAI’s largest corporate backer, and new participation from Nvidia.

He The closing of the funds coincides. with the The company’s continued restructuring efforts and executive changes.including the abrupt departure of its former chief technology officer, Mira Murati, last week.

Also participating in the round were Altimeter Capital, Fidelity, SoftBank and Abu Dhabi state investment firm MGX.

Sarah Friar, CFO of OpenAI told employees on Wednesday that the company will be able to provide them with liquidity through a tender offer to buy back their shares in the company after the financing, although the details and timing have not been decided, according to a source. Earlier this year, the company allowed some employees to withdraw their shares worth $86 billion.

Thrive Capital, which committed about $1.2 billion from a combination of its own fund and a special purpose vehicle for smaller investors, negotiated the option to invest another $1 billion next year at the same valuation if the AI hits revenue target, sources added.

Apple, which was in talks to invest in OpenAI, did not end up joining the financing, said sources who requested anonymity to discuss private matters. Apple did not immediately respond to a request for comment.

The financing came in the form of convertible notes, and conversion to equity is contingent on a successful structural shift toward a for-profit organization that would no longer be controlled by the nonprofit board and the removal of the yield cap for investors. .

The personnel changes have not deterred the enthusiasm of most investors, who anticipate significant growth based on projections from OpenAI CEO Sam Altman.

The company is on track to generate $3.6 billion in revenue this year with growing losses of more than $5 billion. It projects a significant increase in revenue next year to $11.6 billion, according to sources familiar with the figures.

Investors have also gained some protections as OpenAI undergoes the complex corporate restructuring that would give capital to Altman. Talks are still ongoing and a timeline has not yet been determined.

Investors have negotiated terms that would allow them to recover their capital or renegotiate the valuation if changes are not implemented within two years, the sources said.

OpenAI’s meteoric rise in terms of popularity and product valuation has captured the world’s imagination. Since the launch of ChatGPT, it has attracted 250 million weekly active users. The company’s valuation has also risen from $14 billion in 2021 to $157 billion as it grew revenue from zero to $3.6 billion, far exceeding Altman’s own projections at the time.

The company has told investors that it is still actively pursuing artificial general intelligence (AGI), that is, developing AI systems that surpass human intelligence, as it ramps up commercialization and tries to become profitable.

(Reporting by Krystal Hu in New York; Editing by Ken Li and Lisa Shumaker)