Oct 2 (Askume) – OpenAI, the company behind Chatgate, has raised $6.6 billion from investors, valuing the company at $157 billion and cementing its position as one of the world’s most valuable private companies.
The funding attracted returning venture investors including Thrive Capital and Khosla Ventures, as well as new participation from OpenAI’s biggest corporate backers Microsoft (MSFT.O) and Nvidia (NVDA.O).
The fund’s closing coincides with the company’s ongoing restructuring efforts and executive changes , including the abrupt departure of longtime Chief Technology Officer Mira Muratti last week.
Altimeter Capital, Fidelity (FNF.N) , SoftBank (9984.T) and Abu Dhabi state-backed investment firm MGX also participated in the round.
Sources revealed that OpenAI Chief Financial Officer Sarah Frier told employees on Wednesday that the company would be able to provide them with liquidity through a tender offer to buy back their shares in the company after the financing, but the specific details and timing have not yet been determined. Earlier this year, the company allowed some employees to redeem their shares at a valuation of $86 billion.
Thrive Capital, which has invested about $1.2 billion through its own funds and a special purpose vehicle for smaller investors, has held talks on whether the artificial intelligence company can meet revenue targets, the sources said.
Apple Inc (AAPL.O), which is in talks to invest in OpenAI, declined to participate in the financing, sources said . Apple did not immediately respond to a request for comment.
This financing is in the form of a convertible note, with conversion to equity contingent on successful structural changes by the for-profit organization , which will no longer be controlled by the nonprofit board of directors and will have limits on investor returns removed.
Personnel changes have not dampened the enthusiasm of most investors, who expect significant growth based on predictions from OpenAI CEO Sam Altman.
Despite losing more than $5 billion, the company is still on track to generate $3.6 billion in revenue this year. The company expects revenue to grow sharply to $11.6 billion next year, people familiar with the matter said.
Investors are also getting some protection as OpenAI undergoes a complex corporate restructuring (courtesy of Altman Equity). Negotiations are ongoing and no timetable has been set.
The investors have agreed to terms that would allow them to withdraw funding or renegotiate valuations if changes are not implemented within two years, sources said.
The rapid rise in popularity and valuation of OpenAI’s products has captured the world’s attention. ChatGPT has attracted 250 million weekly active users since it was launched. As revenue grew from zero to $3.6 billion, the company’s valuation also rose by $14 billion to $157 billion in 2021, far exceeding Altman’s own estimate at the time.
The company told investors it is actively working on artificial general intelligence (AGI), which means developing artificial intelligence systems that are superior to human intelligence, while it attempts to commercialize and become profitable.
