OpenAI raises $6.6 billion funding at record $157 billion valuation
What's the story
OpenAI, the creator of ChatGPT, has successfully secured a record-breaking $6.6 billion in a recent funding round.
This fundraise has propelled the company's valuation to an impressive $157 billion post-money, making it one of the most valuable private companies in the world.
The fundraising was spearheaded by Thrive Capital, a previous investor in OpenAI, contributing approximately $1.3 billion.
Investment details
Thrive Capital leads funding round with $1.3B investment
Thrive Capital has not only led this funding round but also secured an exclusive option to invest an additional $1 billion at the same valuation through 2025.
Other prominent investors included Microsoft, NVIDIA, SoftBank, Khosla Ventures, and Fidelity. Tiger Global and a firm controlled by the United Arab Emirates also participated in the fundraising event.
As per Bloomberg, investors in the new round can reclaim their investment if OpenAI doesn't convert to a for-profit entity within two years.
Market comparison
OpenAI's funding surpasses rivals and sets new record
With this latest funding, OpenAI has now raised a total of $17.9 billion, according to Crunchbase data.
This places the San Francisco-based firm in a league of its own, surpassing other well-funded AI start-ups like Elon Musk's xAI and Anthropic.
The Wall Street Journal reports that Microsoft invested just under $1 billion, while NVIDIA committed $100 million and SoftBank contributed $500 million to the round.
Funding utilization
OpenAI to utilize funds for AI research and expansion
OpenAI plans to use the newly acquired funds to enhance its leadership in frontier AI research, expand compute capacity, and continue developing tools that address complex problems.
In a blog post, the company expressed gratitude toward its investors for their trust.
It also stated its commitment to working with partners, developers, and the broader community to shape an AI-powered ecosystem and future that benefits everyone.
Financial outlook
OpenAI's operational costs and revenue projections
OpenAI has reportedly spent around $7 billion on model training and $1.5 billion on staffing.
The company's CEO, Sam Altman, has revealed that one of their leading models, GPT-4, cost more than $100 million to train.
Despite these high operational costs, OpenAI's annualized revenue has reportedly surpassed $3.4 billion with projections to reach $100 billion in 2029 — matching the current annual sales of Nestle.