Thrive Capital To Invest Over $1 Bn In OpenAI's Latest Fundraising Round

Thrive Capital is betting big on OpenAI, investing more than USD 1 billion in the artificial intelligence company's USD 6.5 billion financing round. According to individuals familiar with the transaction, Thrive may invest a further USD 1 billion next year at the same valuation if OpenAI meets aggressive revenue expectations.

Insiders revealed on Friday that OpenAI, the rapidly developing AI business behind ChatGPT, expects revenue to reach USD 11.6 billion in 2025, up from an expected USD 3.7 billion in 2024. Thrive Capital's investment is part of a convertible financing transaction that may value OpenAI at USD 150 billion, placing it among the world's most valuable private corporations. According to sources, OpenAI's losses could total USD 5 billion this year, owing mostly to rising processing power expenses.

The current investment round is slated to conclude by the end of next week. While other prominent investors such as Microsoft, Apple, Nvidia and Khosla Ventures are taking part in the round, only Thrive Capital, led by Joshua Kushner, has secured the option to invest an additional USD 1 billion next year at the same valuation—provided OpenAI meets certain revenue milestones. If OpenAI's worth rises further, Thrive may be able to raise its stake at a reduced cost.

The USD 150 billion valuation, however, is contingent on a lengthy organisational restructuring. According to Reuters, OpenAI is trying to remove control of its non-profit board and loosen a ceiling on investment returns. The timetable for this restructure remains unknown.

Thrive Capital is leading the round, with USD 1.2 billion invested from its own fund and a special purpose vehicle for smaller investors. OpenAI, which generates money through corporate service sales and chatbot subscriptions, anticipates tremendous growth. CEO Sam Altman had previously forecast USD 1 billion in revenue for 2023, but ChatGPT alone is now expected to produce USD 2.7 billion, an increase from USD 700 million in 2023. The chatbot presently has approximately 10 million paying subscribers who are charged a USD 20 monthly subscription.

Thrive's investment reinforces its leadership in OpenAI's funding efforts, having previously led a round. Although Thrive's option for additional investment is subject to unannounced revenue targets, it provides a unique opportunity to raise its position at a static valuation in a firm whose value has risen dramatically.

The New York Times originally reported on the financial data and strategic posture of Thrive. Both Thrive Capital and OpenAI have declined to discuss the specifics of the deal.