OpenAI Raises $6.6 Billion in Funds at $157 Billion Value
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(Bloomberg) -- OpenAI has completed a deal to raise $6.6 billion in new funding, giving the artificial intelligence company a $157 billion valuation and bolstering its efforts to build the world’s leading generative AI technology.
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The funding round was led by Thrive Capital, the venture capital firm headed up by Josh Kushner, which put in $1.3 billion. Microsoft Corp., OpenAI’s largest backer, put in about $750 million, on top of the $13 billion it had already invested in the startup, according to a person familiar with the matter. Other investors included Khosla Ventures, Fidelity Management & Research Co. and Nvidia Corp., the chipmaker whose powerful processors are at the center of the AI boom. Microsoft declined to comment.
The deal is one of the largest-ever private investments, and makes OpenAI one of the three largest venture-backed startups, alongside Elon Musk’s SpaceX and TikTok owner ByteDance Ltd. The size of the investment underscores the tech industry’s belief in the power of AI and its appetite for the extremely costly research powering its advancement.
Other investors writing major checks included Tiger Global Management, which put in $350 million, and Altimeter Capital, which invested at least $250 million, according to people familiar with the matter.
Global backers in the round included SoftBank Group Corp. and the new Abu Dhabi-based tech investment firm MGX. SoftBank’s investment was $500 million, according to one of the people, who asked not to be identified because the information is private. Investment firm Coatue Management put in $250 million, and venture firm Quiet Capital also participated.
In a statement, the company said it would use the cash influx to drive forward AI research and increase its computing capacity. “AI is already personalizing learning, accelerating health care breakthroughs and driving productivity,” OpenAI Chief Financial Officer Sarah Friar said. “And this is just the start.”
The huge valuation for OpenAI has transfixed Silicon Valley. “People are shocked at 150 billion bucks,” said Altimeter Chief Executive Officer Brad Gerstner, speaking on stage at the Madrona IA Summit in Seattle on Wednesday. But he also cited reports that the startup expects to generate more than $10 billion in revenue next year – adding that a multiple of 10 times projected revenue isn’t exorbitant for a company about to go public, giving Google and Facebook as comparable examples. The latest deal values OpenAI at more than $150 billion pre-money, before including the dollars raised in this round.