OpenAI raises $1.5 billion from SoftBank through tender offer
OpenAI, the leading artificial intelligence (AI) start-up, has bagged a fresh investment of nearly $1.5 billion from Japanese tech giant SoftBank. The deal will allow both current and former employees of OpenAI to sell their shares, insiders familiar with the matter told CNBC. The tender offer period will run until December 24, giving employees plenty of time to decide if they want to participate in this financial transaction.
SoftBank's CEO shows keen interest in AI sector
The investment was led by SoftBank's billionaire founder and CEO, Masayoshi Son. He has been pushing for a bigger stake in OpenAI, after having invested $500 million in the company's previous funding round. The move fits Son's strategic interest in the AI space and his dedication to back high-value private companies.
OpenAI's financial growth and future plans
Despite the massive investment from SoftBank, OpenAI has managed to raise billions on its own. The company's valuation has skyrocketed to $157 billion within two years of launching ChatGPT. It has also raised around $13 billion from Microsoft and recently closed a $6.6 billion funding round in October, led by Thrive Capital with participation from NVIDIA and others.
OpenAI's liquidity and employee share sales
OpenAI has also obtained a $4 billion revolving line of credit, taking its total liquidity to over $10 billion. The company expects around $5 billion in losses on a revenue of $3.7 billion this year. The tender offer is available to employees who were granted restricted stock units at least two years ago and have held them for that long, with each unit priced at $210, matching the company's latest funding round valuation.
OpenAI's market position and future prospects
OpenAI is up against tough competition from start-ups like Anthropic and tech giants like Google. However, the generative AI market is expected to generate over $1 trillion in revenue in a decade, with business spending on generative AI growing by 500% this year. Last month, OpenAI launched a search feature within ChatGPT, its popular chatbot, making it a strong competitor against search engines like Google and Microsoft's Bing.
