OpenAI Raises $6.6 Bn In New Funding, Projecting $157 Bn Valuation

OpenAI, the firm behind the popular AI tool ChatGPT, has raised USD 6.6 billion in new funding, putting it among the world's most valuable private companies, with a potential valuation of USD 157 billion. The funding round was sponsored by well-known venture capital companies and corporate supporters, including Microsoft, Nvidia and Thrive Capital, despite continuing management changes and organisational reorganisation.

The fundraising round, which includes Altimeter Capital, SoftBank and Abu Dhabi's MGX, showed investor confidence despite OpenAI's rising financial losses. The company, led by CEO Sam Altman, expects to increase revenue to USD 11.6 billion in 2024 from USD 3.6 billion this year. However, losses are also increasing, topping USD 5 billion.

This funding comes as OpenAI undergoes substantial structural changes, including the surprise departure of long-time Chief Technology Officer Mira Murati last week. The corporation is currently undergoing a major reorganisation process that will transition it from a non-profit governed entity to a for-profit organisation, removing investor return caps.

The financing was mostly comprised of convertible notes, which will be converted to stock once the restructuring is completed. Investors have agreed clauses that allow them to return their capital or renegotiate the valuation if the adjustments do not occur within two years.

Sarah Friar, OpenAI's CFO, also alerted staff about future liquidity options through a share buyback program following the most recent financing round. Some employees were allowed to cash out their shares earlier this year, when the corporation was valued at USD 86 billion.

Thrive Capital led the round with a USD 1.2 billion investment, with the option to invest an additional USD 1 billion next year provided OpenAI hits specific revenue targets. This fundraising round comes after OpenAI's popularity skyrocketed, thanks to the success of ChatGPT, which currently has 250 million weekly active users. OpenAI's worth has risen dramatically from USD 14 billion in 2021 to USD 157 billion today, well exceeding Sam Altman's initial estimates. 

OpenAI continues to pursue artificial general intelligence (AGI), with the goal of developing AI systems that outperform human intelligence. This long-term ambition, paired with the company's expanding commercialisation activities, has kept investors interested even as it navigates challenging times defined by leadership upheavals and mounting financial challenges.