OpenAI Raises $122 Billion in Record-Breaking Funding Round Ahead of IPO
On Tuesday, OpenAI announced it had completed a record-setting funding round at a post-money valuation of $852 billion.
The round amounted to $122 billion of committed capital, an increase from the company’s February announcement of a $110 billion figure. The round was co-led by SoftBank, along with other investors, including Andreessen Horowitz and D. E. Shaw Ventures, OpenAI said.
OpenAI initiated the current artificial intelligence boom with the creation of its ChatGPT chatbot in 2022, and the company has since exploded into one of the fastest-growing commercial enterprises on earth. As of March, ChatGPT has over 900 million weekly active users, with over 50 million subscribers. “AI is accelerating productivity gains, turbocharging scientific discovery and unlocking what people and organisations can create,” OpenAI said in a statement.
With the close of its most recent funding round, OpenAI CEO Sam Altman will now face the pressure of justifying his company’s outsized valuation as it prepares for a potential IPO. The start-up has been pulling back from some costly spending plans and closing down various features and products in recent months, including its short-form video app Sora, as it tries to rein in expenses.
OpenAI said on Tuesday that it is generating $2 billion of revenue a month. Last year, it generated $13.1 billion in revenue. The company continues to burn through cash and is not yet profitable.
OpenAI announced $110 billion in commitments from several of its strategic investors who anchored its funding round in February. Amazon was committed to investing about $50 billion in the startup, Nvidia had put in $30 billion and SoftBank added another $30 billion.
The extra $12 billion of capital OpenAI has raised came from a wider range of investors. OpenAI said for the first time it opened up participation to investors through bank channels and raised $3 billion from individual investors.
Microsoft, a long-time partner of OpenAI, also invested, though OpenAI’s Tuesday announcement did not detail the size of the company’s investment. As of late last year, Microsoft had invested over $13 billion in the start-up.
The global investor cohort also featured Altimeter, Appaloosa LP, ARK Invest, affiliated funds of BlackRock, Blackstone, Coatue Management, D1 Capital Partners, Dragoneer, Fidelity Management & Research Company, Insight Partners, The Paragon Group, Sands Capital, Sequoia Capital, Sound Ventures, Temasek, and Thrive Capital.
