OpenAI closes funding at $157 billion valuation, as Microsoft, Nvidia, SoftBank join round
OpenAI closed its long-awaited funding round, announcing that it raised $6.6 billion at a $157 billion post-money valuation.
OpenAI has closed its long-awaited funding round at a valuation of $157 billion, including the $6.6 billion the company raised from an extensive roster of investment firms and big tech companies.
OpenAi, a leading artificial intelligence (AI) research organization, has secured a significant funding round, reportedly led by Thrive capital, with participation from existing investors Microsoft, NVIDIA, SoftBank, and other prominent firms. The round is valued at a staggering $1 billion, with Thrive planning to invest a whopping $1 billion, according to previous reports.
The company's rapid growth, which began with the launch of ChatGPT in late 2022, has been a major story in the tech industry, bringing generative AI into the mainstream and paving the way for tens of billions of dollars in AI infrastructure investments.
OpenAI's revenue has skyrocketed, with the company generating a remarkable $300 million in revenue last month alone, representing a 1,700% increase since the beginning of last year. The company expects to bring in a staggering $11.6 billion in sales next year.
However, OpenAI's revenue comes at a significant cost, as the company needs to purchase large quantities of Nvidia's graphics processing units (GPUs) to train and run its large language models. As a result, OpenAI expects to lose around $5 billion this year, highlighting the significant investment required to maintain its growth trajectory.
Microsoft has invested billions of dollars in OpenAI and is a key partner as the software giant bolsters its Azure cloud business. OpenAI boasts an impressive 250 million weekly active users on ChatGPT, with 11 million ChatGPT Plus subscribers and 1 million paying business users.
Despite its rapid growth, OpenAI is experiencing growing pains, including the departure of key executives. Last week, OpenAI Chief technology Officer mIRA Murati, research chief bOB McGrew, and research vice president Barret Zoph announced their departures. OpenAI CEO Sam Altman denied reports that the departures were related to the company's potential restructuring to a for-profit business.
The company held an all-hands meeting to discuss the potential restructuring, which would see the nonprofit segment remain as a separate entity. Altman denied reports that he would receive a "giant equity stake" in the company, calling the information "just not true."
The latest funding round also included participation from Khosla Ventures, Altimeter Capital, Fidelity, MGX, and Tiger Global. OpenAI Chairman Bret Taylor stated that while the board has discussed the potential restructuring, no specific figures have been discussed nor have any decisions been made.
Overall, OpenAI's latest funding round is a significant milestone in the company's rapid growth and expansion into the AI market. However, the company's costly revenue and growing pains will likely continue to be a challenge in the coming years.
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