OpenAI has reportedly secured a landmark $40 billion investment round led by SoftBank, elevating the company’s valuation to a staggering $300 billion. This represents the largest private tech company funding round in history, according to CNBC.
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The initial phase of the funding will see OpenAI receive $10 billion, with SoftBank contributing $7.5 billion and an investor syndicate providing the remaining $2.5 billion, as reported by Bloomberg. The remaining $30 billion is contingent upon OpenAI’s official conversion to a for-profit entity by year’s end. Failure to meet this condition could result in a 25% reduction in the total funding.
This substantial investment follows OpenAI’s recent announcement of “Stargate,” a $500 billion joint venture with SoftBank, Oracle, and the Abu Dhabi fund MGX, aimed at developing extensive AI data centres over the next four years. OpenAI’s rapid growth is evident in its recent user acquisition, with CEO Sam Altman reporting one million new users in a single hour, driven by the viral success of the “Images in ChatGPT” feature, particularly its Studio Ghibli-inspired art generation. Altman also announced plans to release a “powerful new open-weight language model with reasoning” in the coming months. The company claims ChatGPT now serves 500 million weekly users.
Despite this explosive growth, OpenAI continues to experience significant cash burn. Bloomberg reports projected revenue of $12.7 billion for this year, a substantial increase from the $3.7 billion in annualized recurring revenue last year. However, projections indicate the company may not achieve positive cash flow until 2029, when revenue is forecasted to reach $125 billion.
OpenAI’s funding announcement reiterated its commitment to developing “AGI that benefits all of humanity.” Altman has emphasized the substantial resources required for this endeavour, including computing power, energy, global infrastructure, and significant financial investment. This funding round is viewed as a crucial step towards realizing that goal. Online reports suggest that this funding will be used to further develop and expand its AI models, improve its infrastructure, and continue to attract top talent.
