OpenAI announced that it has secured a new $4 billion revolving credit line. This comes on the heels of a $6.6 billion funding round that solidified its position as one of the most valuable private companies in the world.
With the new credit facility, OpenAI’s liquidity is boosted to $10 billion, enabling the company to invest in expensive computing capacity, including Nvidia chips, as it competes with tech giants like Alphabet-owned Google. OpenAI’s finance chief, Sarah Friar, stated, “This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities.”
The credit line involves several major financial institutions, including JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS, and HSBC. The recent funding round, which valued the company at nearly $157 billion, included contributions from returning venture capital investors like Thrive Capital and Khosla Ventures. Microsoft and Nvidia also joined as investors, with the funding taking the form of convertible notes, contingent on a successful transition into a for-profit company and the removal of investor return caps. Despite recent executive changes, including the departure of the Chief Technology Officer, investors remain optimistic about the company’s future growth, driven by CEO Sam Altman’s projections.
OpenAI is projected to generate $3.6 billion in revenue this year, with expected losses exceeding $5 billion. However, the company anticipates a significant revenue increase next year to $11.6 billion. Notably, OpenAI is offering Thrive Capital the opportunity to invest an additional $1 billion next year at the same valuation if the company reaches a specified revenue goal.