OpenAI, the company behind ChatGPT, has secured a staggering $6.6 billion in a new funding round, giving the AI leader a post-money valuation of $157 billion.
This mammoth round, led by Thrive Capital, is the largest venture capital deal ever, according to TechCrunch. It nearly doubles OpenAI's valuation from just earlier this year, when it stood at $80 billion.
The latest investment will fuel OpenAI’s ambitions to continue advancing artificial intelligence research and scale its AI systems. Thrive Capital contributed $1.3 billion, with an option to add another $1 billion by 2025. Microsoft, a longstanding investor in OpenAI, committed just under $1 billion, while Nvidia, SoftBank, Khosla Ventures, and others also participated in the round. Nvidia pledged $100 million, while SoftBank invested $500 million, reports The Wall Street Journal.
However, the funding comes with significant strings attached. According to the Financial Times, OpenAI has reportedly asked investors to avoid funding competing AI ventures like Anthropic and xAI, Elon Musk's AI startup. The stakes are high as competitors rapidly grow. Anthropic, for instance, has raised $9.7 billion, while Cohere and Mistral hover around $1 billion.
OpenAI’s aggressive funding strategy is driven by its need to sustain its massive operations. The company has reportedly spent $7 billion on model training and $1.5 billion on staffing. According to Forbes, OpenAI is projected to generate $3.7 billion in sales this year, although losses are expected to reach $5 billion. ChatGPT, OpenAI’s flagship product, has more than 250 million users, with 10 million paying for the premium service, contributing to OpenAI’s estimated $2.7 billion revenue for 2024.
Microsoft’s deep partnership with OpenAI continues to be a vital part of the company’s success, having invested nearly $14 billion into the firm since 2019. The tech giant has integrated OpenAI’s models into its suite of productivity products, while Apple has begun embedding ChatGPT into its AI ecosystem.
Despite its massive success, OpenAI faces internal challenges. The company has experienced a wave of high-profile resignations in recent months, including CTO Mira Murati, research VP Barret Zoph, and co-founder Ilya Sutskever. These departures reflect ongoing disagreements over the company's strategic direction, raising questions about its ability to maintain leadership in the fast-evolving AI space.
Furthermore, OpenAI’s governance structure is in flux. CEO Sam Altman has suggested that OpenAI may transition from its current nonprofit status to a for-profit model, a shift that could attract more investments and greater operational freedom.
Reuters reported that the new funding was contingent on this transition, with investors allowed to pull out if the change is not completed within two years.