Dive Brief:
- ChatGPT creator OpenAI announced Thursday that it raised $6.6 billion at a valuation of $157 billion.
- The new funding will allow OpenAI to “double down” on artificial intelligence research, increase compute capacity, and “continue building tools that help people solve hard problems,” the company said in a press release.
- “It’s a watershed moment for the AI revolution and speaks to the inherent value of this OpenAI platform,” Dan Ives, a senior equity research analyst at Wedbush Securities, said in an emailed statement.
Dive Insight:
The move comes amid speculation that OpenAI may be considering an initial public offering and as its recently appointed CFO has been actively touting the company’s strategy.
The funding round was led by Thrive Capital, with participation from several other investors, including Microsoft and Nvidia, according to Reuters and other news outlets. OpenAI didn’t disclose the names of its investors.
Microsoft, which had already been a major OpenAI backer, confirmed that it was among the participants of the latest funding round. “We look forward to continuing our partnership with OpenAI,” a Microsoft spokesperson said in an email.
Thrive Capital didn’t immediately respond to a request for comment. Nvidia declined to comment.
OpenAI was valued at $86 billion early this year, according to the Wall Street Journal.
With its latest funding, OpenAI is now the third-most valuable venture capital-backed company in the world, coming behind Elon Musk’s SpaceX, valued at $180 billion, and TikTok owner ByteDance, valued at $220 billion, according to a PitchBook article.
OpenAI's fresh infusion of capital can help the company to accelerate research in cutting-edge AI technologies like GPT-4 and to acquire or build larger and more powerful computing infrastructure, among other areas, according to Nitish Mittal, a partner in the technology practice of the Everest Group, a research firm.
“AI models require immense computational resources to train and operate,” he said in an emailed statement.
Meanwhile, OpenAI also announced Thursday that it established a new $4 billion credit facility with JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS, and HSBC.
“This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities,” OpenAI CFO Sarah Friar said in a blog post. “We are proud to have the strongest banks and investors in the world supporting us.”
Last week, in an email to the company’s investors, Friar addressed the departure of Chief Technology Officer Mirai Murati, asserting that the company still had a “talented leadership bench,” CNBC reported.
Friar’s appointment to her current role was announced in June.
Next month will mark the two-year anniversary since OpenAI introduced its generative AI-powered ChatGPT tool, which grabbed the world’s attention and kicked off an AI investment race among big tech companies like Microsoft and Alphabet.
In August, OpenAI’s monthly revenue hit $300 million, up 1,700 percent since the beginning of 2023, and the company expects about $3.7 billion in annual sales this year, according to a New York Times report. But the tech company expects to lose about $5 billion this year after paying for costs related to running its services and other expenses, the report said.
