OpenAI secures record $40B funding, doubling its valuation to $300B
What's the story
OpenAI has successfully closed a mammoth $40 billion funding round, the largest ever raised by a private tech company.
The deal values the AI firm at a whopping $300 billion, almost double its worth of $157 billion from an October fundraising round.
The funding, led by SoftBank Group, will be used to further advance AI research capabilities.
Of the total amount raised, SoftBank is investing $30 billion, according to CNBC. Other investors include Microsoft, Coatue, Altimeter and Thrive.
Investment details
Funding breakdown and future plans
SoftBank will invest $10 billion initially, and remaining before the end of 2025.
However, if OpenAI doesn't become a for-profit entity by December 31, SoftBank's total investment could be cut down to as low as $20 billion.
OpenAI intends to use the money to "push the frontiers of AI research even further" and scale its compute infrastructure.
Roughly $18 billion will likely go toward OpenAI's commitment to Stargate—a project to develop AI data centers in the US.
Restructuring challenge
Pressure mounts for OpenAI's transition to for-profit model
Notably, the funding round comes with conditions that pressure OpenAI to convert into a for-profit company by year end.
The conversion plan would need Microsoft and California Attorney General's approval, and has been legally challenged by Elon Musk.
Notably, the company's unique hybrid structure includes a capped-profit limited partnership created in 2019, with the original nonprofit as the controlling shareholder.
Financial outlook
OpenAI's revenue and market position
OpenAI expects its revenue to triple to $12.7 billion this year, further cementing its place in the tech industry.
The latest funding will catapult OpenAI into the league of top private companies such as SpaceX, China's ByteDance, and Stripe.
The move comes as investors show increasing interest in artificial intelligence amid high demand for chatbots and advanced AI agents.