Microsoft and Nvidia Invest $6.6 billion in OpenAI, Making it one of the World’s Most Valuable Firms

With $6.6 billion in funding from investors, OpenAI, the firm that created ChatGPT, may be valued at $157 billion, solidifying its place among the world’s most valuable private companies.

Returning venture capitalists Thrive Capital and Khosla Ventures, together with Microsoft, the largest corporate supporter of OpenAI and Nvidia, have all contributed to the investment.

The funds’ closure occurs in tandem with the business’s ongoing efforts to restructure and replace key executives, including the unexpected exit of Mira Murati, the company’s long standing chief technology officer, last week.

The round was also attended by MGX, the state-backed investment company of Abu Dhabi, Fidelity, SoftBank, and Altimeter Capital.

According to a source, OpenAI Chief Financial Officer Sarah Friar informed staff members on Wednesday that the company will be able to provide liquidity for them through a tender offer to purchase back their company shares after the fundraising. However, no specifics or timeframe have been determined. At a $86 billion valuation, the corporation permitted a few employees to cash out their shares earlier this year.

According to additional sources, Thrive Capital negotiated the option to invest an additional $1 billion at the same valuation next year if the AI company meets a sales target. Thrive Capital invested roughly $1.2 billion from a combination of its own fund and a special purpose vehicle for smaller investors.

According to individuals who asked to remain anonymous to discuss private affairs, Apple, which was in talks to invest in OpenAI, ultimately decided not to join the fundraising. Apple did not answer a request for comment right away.

The investment was provided in the form of convertible notes, and the conversion to equity is contingent upon the elimination of the investor return cap and a successful structural transformation into a for-profit company that is independent of the non-profit board.

Most investors remain enthusiastic despite the staff changes; based on OpenAI CEO Sam Altman’s estimates, they expect big growth.

Despite growing losses of more than $5 billion, the corporation is expected to make $3.6 billion in revenue this year. According to people acquainted with the numbers, it anticipates a significant revenue increase to $11.6 billion the following year.

A few safeguards have also been obtained for investors while OpenAI goes through the intricate corporate reorganization that would give Altman stock. There is still no set timeframe for the talks, which are still in progress.

According to sources, investors have agreed to conditions that would let them recoup their investment or renegotiate the valuation if the improvements are not carried out within two years.

The world is captivated by OpenAI‘s explosive ascent in both product popularity and valuation. ChatGPT has drawn 250 million weekly active users since its launch. In addition, the company’s valuation increased from $14 billion in 2021 to $157 billion as its revenue increased from $0 to $3.6 billion, significantly exceeding Altman’s own initial estimates.

As it ramps up commercialization and tries to turn a profit, the business has informed investors that it is still aggressively pursuing artificial general intelligence (AGI) or developing AI systems that surpass human intelligence.