OpenAI announced plans to raise up to $40 billion in a new funding round spearheaded by SoftBank Group, boosting the AI firm’s valuation to a staggering $300 billion. This substantial investment aims to amplify AI research, bolster computational infrastructure, and refine its tools.
The Japanese conglomerate declared it would invest $10 billion in April, followed by an additional $30 billion in December, contingent on OpenAI’s transition to a for-profit entity within the year.
Of the $40 billion, SoftBank intends to syndicate $10 billion to unnamed co-investors. Sources familiar with the matter revealed Microsoft, Coatue Management, Altimeter Capital, and Thrive Capital are anticipated to contribute the remaining funds.
Should OpenAI’s shift to a for-profit model falter, SoftBank’s commitment could scale back to $20 billion. OpenAI’s goal is to enhance its capabilities for ChatGPT, used weekly by 500 million people worldwide.
The investment underscores a booming interest in artificial intelligence, fueled by chatbot proliferation and the advent of advanced AI systems. Businesses have leveraged AI to streamline operations, while venture capitalists aggressively seek stakes in promising AI ventures.
Previously, OpenAI concluded a $6.6 billion funding round in October, valuing the firm at $157 billion. This new round seeks to nearly double that valuation, driven by OpenAI’s expansive ambitions, according to D.A. Davidson & Co analyst Gil Luria.
However, the pool of investors capable of supporting such magnitude has narrowed, possibly limiting major backing to SoftBank.
SoftBank plans to finance the initial $10 billion through loans from Mizuho Bank and other financial institutions.
Collaborating with SoftBank and Oracle, OpenAI is developing data centers in the U.S. as part of the $500-billion Stargate project, designed to power AI demands.
Moreover, OpenAI is restructuring to form a public benefit corporation to draw more investments and align investor interests with public good. Advisory from the U.S. law firm Morrison Foerster is aiding SoftBank in this endeavor.
This funding positions OpenAI among the world’s most valuable private firms, joining the likes of SpaceX, China’s ByteDance, and Stripe.
Last week, OpenAI released the Images in ChatGPT, an image generation feature powered by GPT-4o. This feature allows users to generate images within ChatGPT itself, which led to an explosion of interest.
One million users have been added to ChatGPT in an hour, claimed Sam Altman, OpenAI CEO. He remarked that this is one of the biggest viral moments since the launch of the chatbot 26 months ago.
