OpenAI has closed a funding round that could total $110bn if certain conditions are met in the coming years, as the start-up bids to wrestle its lead in AI model development back from rivals Anthropic and Google.
Nvidia, Amazon and SoftBank all participated in the fundraising, which values the ChatGPT maker at $730bn, not including the new capital.
The deal marks a stepping stone towards an IPO as early as the end of this year, according to people with knowledge of its plans.
Friday’s funding round dwarfs a $30bn deal clinched by Anthropic this year and a $41bn investment into OpenAI in 2025.
Major Investors
The vast majority of OpenAI’s new financing will come from strategic investors rather than venture capital firms.
Nvidia and SoftBank have each committed $30bn, to be paid in three instalments. Amazon will invest $15bn initially and another $35bn either when OpenAI goes public or manages to build the much more powerful AI dubbed “artificial general intelligence”.
A further $10bn or so in primary equity is expected to come from sovereign wealth funds and investment firms, with commitments being firmed up over the next month, according to a person with knowledge of the matter.
The new capital adds to the roughly $40bn OpenAI holds on its balance sheet, girding the company for a period of continued losses until 2030, when executives forecast being free cash flow positive for the first time.
Capital Use
Much of the capital raised by OpenAI will be reinvested into running data centres and buying chips and cloud services from the Big Tech companies participating in the round.
The OpenAI Foundation, spun off from the company last year, will also sell some of its $180bn stake in the for-profit business on the secondary market if there is more demand from investors, according to the person with knowledge of the plans.
It could sell up to $10bn worth of stock to fund hiring and grant-making activities, they said.
