OpenAI Secures $6.6 Billion Funding with Support from Microsoft and Nvidia, Valuing Company at $157 Billion

OpenAI, the creator of ChatGPT, has successfully raised $6.6 billion from investors, potentially valuing the company at $157 billion and making it one of the most valuable private firms globally.

This funding round saw participation from returning venture capital investors like Thrive Capital and Khosla Ventures, alongside OpenAI’s biggest corporate supporter, Microsoft, and new involvement from Nvidia.

The fundraising comes during a period of restructuring for OpenAI, which recently experienced the sudden departure of its Chief Technology Officer, Mira Murati.

Other notable investors in this round included Altimeter Capital, Fidelity, SoftBank, and Abu Dhabi’s MGX.

OpenAI’s Chief Financial Officer, Sarah Friar, informed employees that they would have the opportunity to sell some of their shares following this funding, although details about the timing are still being worked out. Earlier this year, the company allowed some staff to cash out their shares at a valuation of $86 billion.

Thrive Capital has committed around $1.2 billion from its funds and has secured the option to invest an additional $1 billion next year if OpenAI meets certain revenue goals.

Although Apple was considering investing in OpenAI, it ultimately did not participate in this funding round.

The investment comes in the form of convertible notes, which will convert to equity once the company transitions to a for-profit model and removes limits on investor returns.

Despite recent leadership changes, investor enthusiasm remains high, with many anticipating strong growth based on projections from OpenAI CEO Sam Altman.

The company is expected to generate $3.6 billion in revenue this year, despite losses exceeding $5 billion. For the next year, it projects a significant revenue increase to $11.6 billion.

Investors have secured protections in case the complex corporate restructuring doesn’t happen within two years. If the changes aren’t implemented, they can renegotiate their investment terms.

OpenAI’s rapid rise in popularity and valuation has been remarkable. Since launching ChatGPT, it has gained 250 million weekly active users, and its valuation has skyrocketed from $14 billion in 2021 to $157 billion as its revenue grew from zero to $3.6 billion.

The company continues to pursue the development of artificial general intelligence (AGI), aiming to create AI systems that exceed human intelligence while focusing on commercialization and profitability.