TLDR:
- OpenAI in talks to raise funds at over $100 billion valuation
- Thrive Capital to lead with $1 billion investment
- Microsoft expected to participate in funding round
- OpenAI’s annualized revenue reached $3.4 billion early this year
- Company facing significant expenses, with potential $5 billion loss in 2024
Artificial intelligence company OpenAI is reportedly in discussions to secure a new round of funding that could value the startup at over $100 billion.
This potential investment comes as the company behind ChatGPT continues to expand its AI offerings while facing substantial operating costs.
According to sources familiar with the matter, venture capital firm Thrive Capital is set to lead the funding round with a $1 billion investment. Tech giant Microsoft, already a major backer of OpenAI, is also expected to participate in this latest capital raise.
The talks for this new funding round follow OpenAI’s rapid growth since the launch of ChatGPT in late 2022. Earlier this year, the company’s annualized revenue reportedly surpassed $3.4 billion, reflecting strong demand for its AI products and services.
However, OpenAI’s expansion has come with significant expenses. Reports suggest the company could face losses of up to $5 billion by the end of 2024, highlighting the substantial costs associated with AI development and operations.
If successful, this funding round would mark OpenAI’s largest influx of outside capital since January 2023, when Microsoft invested nearly $10 billion. The new valuation being discussed represents a substantial increase from the company’s previous valuation of around $86 billion earlier this year.
OpenAI’s growth trajectory has caught the attention of investors despite the company’s unique structure. As a nonprofit organization, OpenAI doesn’t offer traditional equity stakes. Instead, investors put money into a for-profit subsidiary, OpenAI LP, and are entitled to a share of that entity’s profits once it reaches a pre-determined cap.
The AI landscape has become increasingly competitive, with major tech companies like Google, Amazon, and Meta investing heavily in their own AI initiatives. Google has poured billions into developing Gemini, its latest AI model, while Amazon and Google have jointly invested $6 billion in Anthropic, the company behind the Claude chatbot.
OpenAI has continued to innovate, recently announcing plans to test a prototype search engine called SearchGPT. This tool aims to provide users with fast, timely answers and clear sources, potentially challenging traditional search engines like Google.
The company’s CEO, Sam Altman, expressed confidence in the potential for improving search technology, stating,
“We think there is room to make search much better than it is today.”
