OpenAI, the company behind ChatGPT, has recently raised $6.6 billion from investors. This funding values the company at $157 billion, solidifying its position as one of the most valuable private companies globally. The investment includes contributions from returning venture capital investors such as Thrive Capital and Khosla Ventures, as well as OpenAI’s major corporate supporter, Microsoft, and new participation from Nvidia.
The funding coincides with the company’s ongoing restructuring efforts and executive changes, including the departure of its longtime Chief Technology Officer, Mira Murati. Altimeter Capital, Fidelity, SoftBank, and Abu Dhabi’s state-backed investment firm, MGX, also participated in the round. OpenAI’s Chief Financial Officer, Sarah Friar, informed employees that the company plans to provide liquidity through a tender offer to buy back their shares, although details and timing are yet to be finalized.
Earlier this year, the company allowed some employees to cash out their shares at a valuation of $86 billion. Thrive Capital committed about $1.2 billion and negotiated an option to invest another $1 billion next year at the same valuation if OpenAI achieves a revenue goal. Apple, which was in talks to invest, did not join the funding.
The funding was in the form of convertible notes, and the conversion to equity depends on a successful structural change into a for-profit entity that would no longer be controlled by the non-profit board and would remove the cap on returns for investors. Despite the personnel changes, most investors remain enthusiastic, anticipating significant growth based on projections by OpenAI CEO Sam Altman.
The company projects a major revenue jump next year to $11.6 billion, although it is currently on pace to generate $3.6 billion in revenue this year, with mounting losses of over $5 billion. Investors have secured protections as OpenAI undergoes corporate restructuring, including the ability to claw back their capital or renegotiate the valuation if the changes are not implemented within two years.
OpenAI has seen a remarkable rise in product popularity and valuation since the launch of ChatGPT, attracting 250 million weekly active users. The company’s valuation has risen from $14 billion in 2021 to $157 billion, as it grew revenue from zero to $3.6 billion, far exceeding Altman’s own projections at the time. The company has indicated that it is actively pursuing artificial general intelligence (AGI) while ramping up commercialization and aiming for profitability.